Asset Protection & Charitable Giving Guide
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Step One: Calculate Your Estate STEP ONE: CALCULATE YOUR ESTATE Before you can determine how to protect your estate from creditors, taxes, and other problems, you first must answer this question: WHAT IS YOUR ESTATE? By definition, your estate is "the property in which you have a right or interest." Therefore, if you own your RESIDENCE, it is a part of your estate. Your BANK ACCOUNTS are a part of your estate, as are your MOTOR VEHICLES, WEARING APPAREL, FURNITURE, APPLIANCES and anything else in which you own an interest. This can mean JOINT TENANCY property, as well as certain property rights which you own, such as an OPTION TO PURCHASE, a CONTRACT FOR DEED, a POWER OF APPOINTMENT (the right to decide where someone else's property goes) and many other rights. Essentially, anything you consider to be of value is a part of your estate. For your own use, please list below the probable value of all property that you own. For each item, list whether you own it (1) Ind., which is individually (no one else is on the title except you); (2) Joint, which means that you own it in joint tenancy with others (the title must specifically state "in joint tenancy with rights of survivorship" or something similar) or as tenants in common with others (this is what joint ownership is presumed to be, if the words "joint tenancy" are not included in the title or "tenancy by the entireties", which is a form of joint ownership between a husband and wife; (3) Rev. Trust, which is ownership in a typical revocable living trust (a trust you can alter, amend, revoke or otherwise change and control); (4) Irrev. Trust, which is ownership in an irrevocable trust (a trust which you do not control and which you cannot change); (5) Corp., which is ownership in a corporation, whether a C-corporation or a S-corporation; (6) LLC, which is ownership in a limited liability company; or (7) Part., which is ownership in a partnership, whether a general or limited partnership. In calculating the value of any items held in a corporation, partnership or limited liability company or held as tenants in common with someone, include only the value of your interest in the property. For example, if you have a $100,000 parcel of land in a partnership, but you are only a 20% partner, include only $20,000 of value. If you own a $10,000 stock fund as tenants in common with three other people, include only $2,500 of value. If the asset is in an irrevocable trust of which you are not a beneficiary, you do not have to include any of the value. However, depending upon how the trust is created, the entire value of the assets in the trust can be included in your estate. The total of all of the above items should be your TAXABLE ESTATE. You can then subtract all debts (this will be all debts owing as of the date of death, minus any insurance payments such as credit life, health insurance, Medicare and Medicaid, and funeral and administration expenses) that you have to arrive at your NET TAXABLE ESTATE. Then, proceed to the next section to determine what your estate taxes might be. |
