Estate Planning

Estate Planning Quick Tips:

1. Joint Tenancy is ownership of property between two or more people where the survivor owns all of the property. When alive, each joint tenant owns all of the property. Because of this entire ownership, any joint tenant's creditor may force a sale to pay IRS taxes, or as an asset in bankruptcy, or to liquidate a divorce or civil judgement. Joint tenancy may be a good idea between spouses, but not a good idea among other family members.


2. Unfortunately, two things to be sure, all of us die and all of us pay taxes! However, when we die, all Capital Gains property owned by us for over a year will avoid income taxes on the later sale of that property. The government will re-value that property as of our death. However, our joint property held with our spouse does not get that treatment. Trusts or individual ownership can preserve that tax treatment.


3. There may be at least three or more tax returns due upon the death of an individual. There is the last IRS Form 1040 for that individual; the Form 1041 for the yearly income of the estate; Form 706 for the Estate itself. To reduce taxes, some deductions may be taken twice, some once, and some never.


4. Probate means "to prove the will." Probate and Administration are both used by the courts to decide who gets property by Will or law. The personal representative is the authorized person to talk to the judge or others about how things should happen. There needs to be notice give that someone died so that creditors could present claims and so that the heirs can safely get property free from debt.