Estate Tax Exclusion Extended

It appears that the fiscal cliff has been avoided and that has included the Estate Tax Exclusion to be left at the $5 Million, indexed at inflation, so it should be something more than the the $5.12 Million set in 2012. The top estate and gift tax rate was increased to 40% though. Information about the new law is coming in as it is being analyzed. Further, the Bush tax cuts were continued for individuals earning $400,000 or couples earning $450,000. I have not heard reports as to whether the law is permanent or set for several years, like the prior law. Also, we are still waiting to hear if the income cap for additional 3.8% tax for the health care law is still $250,000 or the $400,000/$450,000 applicable to the extension of the Bush tax cuts.

Checking Your Lists

While we wait to see what Congress is doing about the fiscal cliff and the estate tax exemption, this is a good time to make sure that you have properly listed your beneficiaries for your IRAs, 401ks, life insurance and annuities. Even with a trust, if you have not filled out your beneficiary forms, your estate could need to be probated. Also, be sure you have all the updated addresses and contact information for your agents for health and finances. Most health care powers of attorney have the contact information of the agents on the documents.

Do No Contest Clauses work? Not too well. Previously, if an omitted heir could establish that he had probable clause to challenge the no contest clause (such as because the writer of the Will was under mistake or undue influence) the court would allow a challenge to the Will and not enforce the no contest clause. In a recent case, In Re Estate of Stewart, the Arizona Court of Appeals stated that if the no contest clause prohibited devisees or beneficiaries from assisting the omitted heir, the court would interpret this as enforceable as long as the beneficiary was deposed or subpoenaed. The beneficiary could not "voluntarily" give information to the omitted heir where the no contest clause prohibited it.

Trusts and Agreements help balance family and new relationships

We live so much longer now, many of us start a second adulthood in our 59s and 60s. Sometimes with a new career. Sometimes with a new love. Estate planning, such as with a trust or domestic partnership agreement,can balance the need to provide for a new love and the desired gifts to adult children. A domestic partnership agreement is similar to a pre-nuptial agreement and used when couples do not marry. If a couple is planning to marry or has married than pre-nuptial or post-marriage agreements are great tools to ease family relationships.

Gun Trusts Can Limit Taxation Upon Death And Help with Multiple Users

Gun Trusts are revocable trusts different and separate from a revocable living trust normally used for estate planning. With a Gun Trust, multiple owners (spouses or parents and adult child) can own firearms together, and when one dies, the other remains the Trustee and additional transfer tax should not be needed. Also, Gun Trusts allow guns to be distributed without violating federal law. That is, if a beneficiary is a minor or otherwise unqualified to have a firearm, the Trustee cannot distribute the firearm but has instructions for sale or alternative distribution. Also, for spouses where one uses the firearms occasionally only, the Gun Trust would allow the spouse as Trustee or designated beneficiary to use the firearm without violating the limitations of use to owners which apply to NFA firearms. Gun Trusts are helpful for both NFA firearms (such as automatic weaponry) and non-NFA firearms. For more information, feel free to contact me.

Changes in Revocations of Beneficiary Deeds

Revocations of Beneficiary Deeds now need to reference the name of the Grantee that was listed on the beneficiary deed, as well as the recording instrument number of the beneficiary deed in order for the Maricopa County Recorder to accept the Revocation. This changes was not done by rule and adds a requirement to the statutory form. It is likely the new requirement helps the Maricopa County Recorder index the beneficiaries.

Pay on Death Designation for Vehicles

The Arizona Revised Statutes now allow for a Beneficiary Designation for Vehicle Transfer upon Death. The designation can be signed and kept with the title of the car, mobile home or other applicable vehicles. Since the law is new, it is not clear how effective it will be if the the vehicle is being financed.