Tag Archives: Estate Planning

Defeat of DOMA has major estate tax implications

The Supreme Court today made a decision to strike down DOMA (Defense of Marriage Act); this will dramatically expand the access of married gay couples to many federal benefits related to tax, health and pension that have been denied to them until now.  This decision affects same sex couples in the 12 states and the District of Columbia which allow gay marriage; these couples represent about 18% of the U.S. population.  With the addition of California, the percentage will shoot up to 30%.be even higher.

DOMA was signed into law by President Bill Clinton in 1996, and prevented the government from granting marriage benefits in more than 1,000 federal statutes to same-sex married couples in the states that allowed gay marriage.

One very important benefit of today’s Supreme Court decision is related to estate taxes.  Until now, same sex married couples could not benefit from married couple estate tax laws.  Now they will have the same benefits as all other married couples.

According to Yahoo News,  ” Eighty-three-year-old New Yorker Edith Windsor brought the DOMA suit after she was made to pay more than $363,000 in estate taxes when her same-sex spouse died. If the federal government had recognized her marriage of more than four decades, Windsor would not have owed the sum. ”

With the Supreme Court’s decision to strike down DOMA with a 5-4 vote, Windsor will finally be eligible for a tax refund, plus interest.

For more information about estate taxes and settling an estate, go to www.diesmart.com.

Plan For Death

"Just a little bit of planning made my live so much better."

“Just a little bit of planning made my life so much better.”

THE PAPERWORK GRIEF OF DEATH!

Dying is not just an emotional event in our life, it is a major financial event as well.  Consider the following possible financial consequences of your death:

  • The paperwork and legal procedures required to settle your estate can cost your family four to eight percent of your net worth.
  • If probate is required, your family’s inheritance can be delayed for months, and in some cases, several years.  During the probate process, the courts decide when your family can sell your personal residence.  Even though your children can’t afford to pay the mortgage.
  • Contract law may override the instructions in your Will or Living Trust
  • Giving your share of your estate directly to your spouse may cost your family hundreds of thousands of dollars.
  • If you or your surviving spouse die without a will, most state intestate laws do not provide for stepchildren.
  • Naming a minor child as a beneficiary can subject the supervision of their money to the probate court.  For a fee.
  • Giving money directly to a minor child with special needs can make the child ineligible for government benefits.
  • Your business may go out of business because no one know how to access digital records.
  • The beneficiary choice of per capita or per stirpes may accidentally disinherit a grandchild
  • Your choice of a beneficiary for your 401(k) or IRA retirement accounts can dramatically change the after death tax deferred value of these accounts.
  • If you don’t have long term care insurance, you must use your assets to pay for long term care.  There may be no assets when you die.
  • Life insurance proceeds may be part of your taxable estate.  If your estate is subject to the federal estate tax, almost half of the life insurance proceeds may be needed to pay the estate tax on the insurance proceeds.

ESTATE PLANNING

When someone dies, a series of laws and rules determine who has the legal authority to manage the decedent’s financial affairs.

These rules and documents also determine your beneficiaries and the cost, time and effort it will take to settle your estate when you die.  Planning now will save your family money later.

These resources are useful when making plans to keep your money when you die:

Wills

WHAT IS A LAST WILL AND TESTAMENT?

A will is a written document, signed by the author and witnesses, that meet the requirements of the state in which the author resides.

  • The author can document the beneficiaries whom he or she wants to get his probate estate.
  • The author can designate a personal representative to administer the estate and follow out the author’s wishes.
  • In many states, parents must name a guardian of minor children in a Last Will and Testament.
  • The author can request the probate court waive the requirement for a surety bond for his or her estate representative.
  • The author can include instructions to set up a testamentary trust to manage beneficiary assets rather than giving assets directly to the beneficiary.

Wills usually require a probate process assuring the instructions in the will are carried.

Q.   How does the probate court determine the will is authentic?

A.  In many states, the estate representative must be able to show the original will.   If the original will cannot be found, some states will consider the author to have die intestate.

Some states require the witnesses who originally signed the will to attest they watched the author sign the Last Will and Testament.

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Q. What is the difference between a Will and a Trust?

A. Both a Will and a Trust allow you to name someone to manage and distribute your property to your beneficaries when you die.     You can find out the difference here.

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Q.   How do you make a Last Will and Testament?

A.   You can visit an attorney who specializes in estate planning.   Some people prefer to do it themself and use web-based or PC-based software to create their last will and testament.

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