Estate Planning

Tenancy by the entirety is a form of co-ownership. Tenancy by the entirety exists only between spouses and is generally used for real property. It includes the right of survivorship and neither spouse can dispose of the asset without the other's permission. Tenancy by the entirety is not recognized in all states.

Joint tenancy is a form of co-ownership. Joint tenancy is when property is owned equally by two or more persons who have rights of survivorship. This means that when one joint tenant dies, the property passes automatically to the surviving tenants.

A state court must authorize transfer of probate assets. Non-probate assets transfer automatically to the new owners at death.
Characteristics and examples of Probate assets are assets are owned individually by the decedent.
Decedent's share of assets is owned as tenants in common. Life insurance, annuities and retirement assets without any beneficiary designations.
Life insurance, annuities and retirement assets if the estate is the named beneficiary or if the estate receives the asset because the named beneficiaries are deceased.
Characteristics and examples of Non-probate assets are assets are owned jointly with the right of survivorship. Life insurance, annuities and retirement assets with valid beneficiary designations other than the estate. Securities or security accounts to be "transferred on death".
Bank accounts and other assets with "pay on death" or trust designations. Assets in trust if the instrument includes a plan for distribution after death.

An estate plan is a premeditated, systematic process of planning for the accumulation, conservation, and distribution of an estate using the most efficient and effective methods for accomplishing the goals of the owner. Tax considerations are usually a significant part of the effort. At the death of the owner, the estate plan insures the distribution of the estate with minimum administration costs and taxes, according to the wishes of the owner. Minimizing the cost of distributing an estate can only be accomplished by anticipating expenses and planning ways to avoid them before death occurs. Speak to your local CPA about the strategies to accomplish your plan.

A QTIP Trust is a Qualified Terminal Interest Property Trust. A QTIP Trust permits the spouse with all of the assets to "leave" the property to the surviving spouse, but the surviving spouse cannot touch the principal of the trust. He or she must hold on to the QTIP Trust's income (interest, dividends, royalties, etc.) for his or her lifetime. But, the spouse with all the assets gets an Unlimited Marital Deduction that makes his estate pay Zero Estate Tax upon his death and it can utilize the surviving spouse's exclusion when she dies. Speak to your local CPA or attorney about this tax planning strategy.

The account balance of all your husband’s IRA's at the time of death is included in the gross estate.

Unlike yourself who is entitled to roll over an IRA from your deceased spouse, your children must pay taxes on the IRA money they inherit. The trick is to stretch out the required minimum distributions from the deceased spouse's IRA since the IRA cannot be rolled over into your children's name. If your spouse died before 70 1/2, your children must take the money within five years or their own life expectancy. You should retain a CPA to determine the minimum distributions. If your spouse died after reaching 70 1/2, it is even more complicated. Speak to your local CPA.

Only the spouse of the deceased can roll over an inherited IRA.

You have the right to file jointly in the year your spouse died. Include your spouse's income earned only through the date of his or her death. Income earned after his or her death may have to be included on the decedent's estate income tax return which is filed on form 1041. To determine if it is necessary to file this tax return or an Estate 706 return, contact a local CPA.