Oral wills, or nuncupative wills, are permitted in many states under limited circumstances. However, a form of guidelines should be utilized if you are planning on making an oral will to be assured that it will be honored.
At times, circumstances in our lives may change. This can be due to a remarriage, birth, death, divorce, change of address, change of executor or guardian, or other situations where our present will may not cover everything that we now believe it should, but for the most part, it is still factual. We may have acquired additional assets or, in the alternative, we have recently disposed of assets that are bequeathed (assigned to a specific person) in our present will, or we wish to distribute one specific part of our assets in a different manner. It is under these conditions where it can be beneficial to change one specific part of a will rather than rewrite an entire will. It can also be far more cost-effective to draft a codicil when only a specific portion of a will needs to be altered.
Theoretically, anyone with assets should have a will. A person without a will is said to have died intestate. When someone dies intestate, his or her assets generally pass as follows:
The question of a living will is becoming more and more popular as time goes on. Years ago the idea of designating someone to make such a personal decision regarding your life was unthinkable. Decisions were simply made by doctors and family members as to the best course of action without regard to what the patient might wish, or without any knowledge as to their wishes. The living will takes the guesswork out of these decisions, as the patient has made their wishes known long before a final decision is necessary.
Are you one of the nearly two-thirds of Americans who doesn’t have a Will? If cost or inconvenience has prevented you from composing your Will, you can stop putting off the inevitable today.
Although in the past people primarily relied on attorneys to create their Wills, today you can compose your own completely legal Will quickly and easily on your own. You can obtain a legal Will form that was prepared by an attorney online at very little cost. Then it is simply a matter of filling in the blanks with your personal information.
Everyone has heard about a case involving a dispute over life-prolonging medical procedures. The stress and anxiety such decisions entail are impossible to imagine until you are burdened with having to make them. The only possible worse scenario is being prevented from carrying out your loved one’s wishes regarding life support treatments and care. One way to spare your loved ones from suffering through either of these predicaments is to create a living will.
Unless you were living deep in an underground cave in 2004, you remember the heart-wrenching story of Terry Schiavo and the controversy surrounding her death. Perhaps the only thing more tragic than the fact that the by all accounts wonderful person was living in a persistent vegetative state, was the battle that ensued between her ex-husband and her parents over whether to remove the feeding tube that was artificially maintaining Terry’s life.
If you’re like most of us, this story forced you to confront the issue of your own mortality, and what fate would befall you if you were in Terry’s situation. The good news is this does not have to be a roll of the dice. All of the arguments and heartbreak that took place within Terry’s family could have been prevented had she had a Living Will.
Planning for arrangements in the event of your death may seem like a daunting, and even creepy task, but the peace of mind you’ll get makes it worth it. Who knows, it may even tack on a few extra days to your life.
First off, whether they’re in a file folder in your home or in a bank safe deposit box, make sure all of your documents are in one (ideally fireproof) place. If you keep your important documents in a safe or a safe deposit box, you’ll want to make sure that your loved ones have the key and/or combination they’ll need to access them. Be sure to include any and all of the following documents: investment documents, retirement accounts, insurance policies, Living Will and your Last Will and Testament. Some documents of secondary importance you may also want to include are: frequent flyer account information, recurring credit/debit card payment info, and any union contact info.
It is a widely held belief that one of the most unfortunate circumstances in modern society is to have a tax return selected for audit by the Internal Revenue Service (Service). Estate tax returns are subject to audit and adjustment like any other tax return.
Under current law, an estate tax return must be filed by the Personal Representative of the estate of every U.S. citizen or resident whose gross estate exceeds $675,000. The return must be filed no later than 9 months after the date of the decedent¡¯s death unless an extension has been granted.
A Qualified Personal Residence Trust (QPRT) is a trust in which the person establishing the trust, call the Grantor, reserves the use of a residence (either the Grantor’s primary residence or a seasonal residence) for a specified term of years. In the trust agreement, the Grantor designates the individuals who will be entitled to the property at the conclusion of the trust term. These individuals are called “remaindermen”, and they are typically the Grantor’s children, but they do not have to be.
Because a QPRT is irrevocable, the Grantor makes a gift to the remaindermen at the time the QPRT is established. The value of the gift, however, is not the fair market value of the residence being transferred to the QPRT. Instead, the value is the remaindermen’s right to the property at the end of the Grantor’s retained use. In other words, it is only the value of the remainder interest which represents the gift and not the full value of the residence.
A QPRT is an especially effective estate planning device because, under IRS valuation tables, the Grantor’s retained interest is overvalued while the interest of the remaindermen is undervalued. Additionally, the IRS valuation tables assume that the property in a QPRT does not appreciate once it is transferred to the QPRT. While this assumption may be accurate for short periods of time, over longer time periods most residential real property will appreciate.
For example: An individual, age 65, has a residence worth $600,000. He sets up a QPRT retaining the right to use the property for 15 years with a reversionary interest (a right to receive the property back) if he dies during the 15 year term. Under IRS tables, the Grantor’s right to use the property for 15 years plus the reversionary right are equal to 77.93 percent of the fair market value of the property ($467,568). The gift tax value of the remainder interest in the residence is worth only 22.07 percent of the value of the residence ($132,432). Frequently, the Grantor’s gift can be paid by a debit against his exclusion amount (currently $345,800).
If the Grantor survives the 15 year period, the property passes to the remaindermen with no further estate or gift tax consequences. Also, if the property appreciates over the retained use term, the appreciation totally escapes estate taxation.
Returning to the example discussed above: assume that the property appreciates at 4 percent a year for the 15 years of the Grantor’s retained use. At the end of the 15 years, the property would be worth $1,080,566. There would be no additional gift or estate tax. Thus $480,566 worth of appreciation ($1,080,566 - $600,000) plus the $467,568 original value (total $948,134) would completely escape estate and gift taxation.
If the Grantor were in a 50 percent federal estate tax bracket, the overall estate tax savings would be $540,283.00. Of course, greater tax savings can be achieved if the property appreciates faster than 4 percent.
In our example, if the Grantor survives the term, he achieves the following:
* Passes property to his family actually worth $1,080,566 at a gift tax value of only $132,432;
* Retains all tax advantages of ownership during the use period (i.e. homestead exemption, income tax deduction of real estate taxes); and
* Retains the use and enjoyment of the property during the QPRT term (and even for extended periods thereafter if other steps are taken).
Courtesy of: Steven W. Tarta, Attorney at Law. 45 N. Broad Street Ridgewood, NJ 07450 PHONE 201-444-8448 E-MAIL: TARTALAW@ATT.NET Fax 201-612-0827. Please be sure to check out www.tartalaw.com for estate planning learning center information.