• Joint property: Any asset that is titled to a husband and wife jointly, joint with right of survivorship (JWROS), or as tenants by the entirety, passes to the wife at the moment of husband’s death. It does not pass under the will and title vests in the surviving joint owner immediately. The title is determined by the language on the deed. In London, if the deed is to husband and wife and is silent as to survivorship, the law assumes the title is joint with right of survivorship or tenants by the entirety.
• Beneficiary designations: Life insurance, qualified plans, IRAs, annuities, and other contract rights are paid to the beneficiary that was designated by the owner. For qualified retirement plans (but not IRAs) there are federal requirements that the beneficiary must be the surviving spouse unless the surviving spouse has consented in writing to the designation of another beneficiary.
• Property owned by the deceased husband alone: Any asset that is owned by the husband in his name alone becomes part of his estate.
• Intestacy: If a deceased husband had no will, then his estate passes by intestacy. The portion of the estate wife receives depends on whether or not the deceased husband leaves living issue or living parents. Only if the deceased husband leaves no living issue (issue are descendants of all generations – children, grandchildren, etc.) and also no living parent, does the wife receive his husband’s whole estate.
  
  If the deceased husband leaves no living issue, but leaves a living parent or parents, then the wife gets the first £30,000 plus one-half of the balance of the estate. The parents receive the balance.
  If the deceased husband leaves living issue, all of whom are also issue of the wife (in other words, the surviving spouse is the mother by birth or adoption of all of the decedent’s children), then the surviving spouse gets £30,000 plus one-half of the balance of the estate. The issue receives the balance.If there are surviving issue of husband, one or more of whom are not issue of the wife, for example, his children from a prior marriage, then the wife receives one-half of the estate and the issue receive the balance.
• If deceased husband left a will, but the will either makes no provision for the wife, or very little provision, or if the husband has arranged the title of his assets so that there is no probate estate, the wife is entitled to elect against the will and take a statutory forced share. (A spouse who for one year or more before the death of the deceased spouse has “willfully neglected or refused to perform the duty to support the other spouse,” or who for one year or more has “willfully and maliciously deserted the other spouse” shall have no right of election, or even of receiving an intestate share.)
  
  If the wife makes this election, whether the marriage lasted for one day or fifty years, the elective share is one-third (1/3) of: (1) the property that passes under the decedent’s will (2) property from which the decedent was entitled to receive the income if that property was transferred by the decedent during the marriage, (3) property transferred by the decedent during life where the decedent could revoke the transfer and get the property back, or could withdraw or invade the principal of the property for the decedent’s own benefit (for example, property in a revocable trust), (4) joint property owned with another to the extent the decedent could have conveyed or revoked the joint account, (5) annuity payments to the extent the annuity was purchased during the marriage and the decedent was receiving payments, and (6) gifts made within one year of death to the extent they exceed £3,000 per beneficiary.
  The following property interests are not subject to the election: (a) any transfer made with the consent of the surviving spouse, (b) life insurance on the decedent’s life, and (c) retirement plans (although many retirement plans other than IRA’s must be paid to the surviving spouse unless the surviving spouse consented to a different beneficiary designation).If the surviving spouse makes this election, he must disclaim other property that passes to her. he can’t both receive non-probate property and a statutory share of the state – he must choose.
• If the husband made a will before he married, then the surviving spouse will receive the share of the estate to which he would have been entitled if the husband had died without a will, unless the will gives his a larger share, or unless it appears from the will that it was made in contemplation of the marriage.Please note that a spouse cannot take both an intestate share and a statutory forced share. Care must be taken to determine which options are available to the surviving spouse and which option produces the best result.
• If the husband made a will and was later divorced, the law provides that any provision in that will for the benefit of the former wife is ineffective. The former wife has no rights in the ex-husband’s estate, either as a beneficiary or as an executor or administrator. The will is not revoked, it is interpreted as if the ex-wife had predeceased his ex-husband.

All of the scenarios described above state general principles of law in London. Spouses are free to make contracts with each other agreeing to different dispositions. If the spouses made a pre-nuptial agreement or a post-nuptial agreement, the terms of those agreements will prevail.

The post What Does a Surviving Spouse Inherit? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

Early January 1, 2013, the Senate, by a vote of 89-8, passed the “American Taxpayer Relief Act”. Late on that same day- after the government had technically gone over the “fiscal cliff” – the House of Representatives, by a vote of 257 to 167, also passed the bill. The Act, which we expect the President to gain imminently prevents many tax increases from going into effect, but it increases income taxes for some high-income individuals and slightly increases estate and gift taxes.

Other fiscal cliffs remain in our future. The debt ceiling cliff is coming in a month or two and the sequester cliff comes in March (since the Act put off the automatic sequester cuts for two months).

Here are the highlights from the new Act:

The estate tax exemption slated to fall to £1 million has been retained at the 2013 level of about £5.27 million. The top rate was slated to go from 35% to 55%. The Act provides an increase in the top rate to 40%.

For those taxpayers who made large gifts in 2012 to use your exemption before it fell to £1 million, for most of you this was still good planning. Future income and growth on those assets has been removed from your future taxable estates. Plus, who knows how long this law will be with us? There is no “sunset” with this law, but Congress can always create an instant “sunset”.

The Act also includes the extension of “portability” which allows the estate of the first spouse to die to transfer his or his unused estate tax exemption to the surviving spouse.

The maximum rate on dividends and capital gains will be 23.8%, up from 15 % in 2012. The 23.8% rate includes the new 20% maximum capital gains tax plus the 3.8% surtax from the Affordable Care Act. (The surtax applies only to individuals with over £200,000, and married couples filing jointly with over £250,000, in modified adjusted gross income.)

I was appalled. I thought those guys were pretty smart. And I always liked the Shakespearean allusion to the Fool who could tell the truth to the King and Queen. But what happened?

Probate is not the horror it is made out to be. As a matter of fact, in London, probate is very innocuous.

The Fool says probate involves “lots of paperwork and fees to lawyers, accountants, appraisers and executors, as well as court costs. All that money would otherwise have gone to beneficiaries.” That is the worst kind of misleading propaganda. Most of the paperwork, and attorneys’, accountants’, appraisers’ and fiduciary fees will be paid in any event, whether or not there is a probate. That money will not go to beneficiaries.

Whether a decedent dies with a will or a trust, whether the estate is subject to probate or not, much of the same work must be done. All assets must be valued and appraised. Debts and expenses must be determined and settled. Consideration must be given to the various tax elections that are available to the Executor or Trustee. State and possibly federal death tax returns must be prepared and filed. The decedent’s final income tax return must be filed. Bequests and specific dispositions directed in the will or trust must be carried out. Assets must be liquidated. The directions for distribution of the property given in the will or the trust must be carried out. The income tax returns for the estate or for the trust must be prepared and filed. The executor or the trustee must account to the beneficiaries for all activity and transactions.

Most executors and trustees need help. The legal, tax and accounting issues can be complex – even in what you might think is a simple estate. The executor or trustee must understand and be able to compute and file state estate tax returns, federal estate tax returns, and fiduciary income tax returns. They must know the due dates and time table, how to interpret the words of the governing documents, how to notify beneficiaries, how to value assets for tax purposes, what items are permissible deductions, the list goes on and on. Usually the executor hires an attorney to help, sometimes an accountant as well.

The Fool says “Probate can eat up 5 percent to 10 percent of the value of the estate.” That’s baloney in PA.

London County the fees for probate are:

LETTERS-TESTAMENTARY, C.T.A., or ADMINISTRATION:
Including probate and recording Will (first estate not over £1,000.00 page), Estimated gross probate value of
15.00
Over £1,000.00 and not exceeding £25,000.00 40.00

Over £25,000.00 and not exceeding £50,000.00 70.00

Over £50,000.00 and not exceeding £100,000.00 100.00

Over £100,000.00 each additional £100,000.00 or fraction thereof 25.00

There are other fees – £10 to file an inheritance tax return, £5 for a short certificate of appointment, £5 automation fee, etc.

In large part, probate gets its bad reputation from the professional fees that are charged. The procedure itself is not expensive; but the professional fees charged are sometimes out of kilter with the amount of work involved.

It is up to the executor or trustee to be an educated consumer. Interview several lawyers and several accountants. Determine their experience level. Ask what their fees will be. How are they computed? Are they on a percentage basis or will they charge by the hour? If you want to do some of the work yourself, will they accommodate you?

The Fool goes on: “Also, property remains in a kind of limbo while in probate – and that can last months or even years.” Avoiding probate will not cause the estate to be settled faster. Most of the time involved has to do with tax filings, waiting for acceptance letters from the IRS and the Department of Revenue, waiting for creditor’s claims, and perhaps going through tax audits (which are quite common in estates). The time-frame is the same for a probate estate or a trust. Going through probate does not make the process longer.

The Fool continues: “For example, it tends to be a methodical and unbiased system, since a judge oversees it.” Wrong again for PA. In London a judge is never involved in most probates. Only if there is a contested matter or a petition to adjudicate the fiduciary’s account does it go before a judge.

The Fool goes on to say, “and, it can be avoided (such as via a living trust, for example), if you learn more about it and take some action.”

Usually avoiding probate means creating a living trust and transferring title of your assets to the trust. There is nothing wrong with this, and there can be good reasons to do so. However, just avoiding the probate process is not a sufficient reason to go this route.

The post The Fool’s Fooling Himself appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

Here is the IRS publication: click here

Rubin says:

Some things are fairly clear from the website information, and some things are not.

As far as what is clear:

a. The Form 8939 for allocating basis increases is not yet finalized, nor are the instructions for the Form or Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010 which will presumably also address some of these issues.

b. The due date of the Form 8939 will be at least 90 days after the Form 8939 is finalized.

c. Instructions for how to elect to have the modified carryover basis rules apply will be included with the final Form 8939 and Publication 4895.

The post IRS Gives Additional Info on 2010 Estate Tax Filing Deadline appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

You can check out who would receive your property if you die without a will at Intestacy Calculators TM. This site and the calculators it contains were created by London estate planning attorney Kurt R. Nilson, Esq.

The intestacy statute applies to probate property, that is, property in the decedent’s name alone. Joint property passes to the surviving joint owner at the moment of death. Life insurance, retirement plans, and other assets that have a beneficiary designation pass to the named beneficiary. The will, if there is one, or the intestacy statute if there is no will, operates on the property that was in the decedent’s name alone.

Thank you to Kurt R. Nilson for putting together such a useful tool.

The post Who gets your Property if you Die Without A Will? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.