Frequently Asked Questions

What are the differences between some common forms of property ownership?

There are a variety of ways that one can hold title to property: Sole Ownership: owned entirely by one person. Words in the deed such as “Bill, a single man” establish title as sole ownership. Tenants in Common: a form of co-ownership where property is owned by two or more persons at the same time. The proportionate interests and right to possess the property between the tenants in common need not be equal. Upon death, the decedent’s interest passes to his or her heirs named in the will who then become new tenants in common with the other tenants in common. Words in the deed such as “Bill, John and Mary as tenants in common” establish tenancy in common. Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s). Words in the deed such as “Bill and Mary, as joint tenants with right of survivorship” establish title in joint tenancy. This form of ownership is not available in all states. Tenancy by the Entirety: a special form of joint tenancy when the joint tenants are husband and wife — with each owning one-half. Neither spouse can sell the property without the consent of the other. Words in the deed such as “Bill and Mary, husband and wife as tenancy in the entirety” establish title in tenancy by the entireties. This form of ownership is not available in all states. Community Property: this special form of ownership between spouses is only available in “community property” states. Upon death, the decedent’s interest passes in a manner similar to tenants in common. Words in the deed such as “Bill and Mary, husband and wife as community property” establish community property ownership. Trusts: While not technically a form of ownership, you may own real property through your Living Trust. Upon your passing, your interest would pass to successor trustees and/or beneficiaries you have designated in your trust.Q: What are the differences between some common forms of property ownership? There are a variety of ways that one can hold title to property: Sole Ownership: owned entirely by one person. Words in the deed such as “Bill, a single man” establish title as sole ownership. Tenants in Common: a form of co-ownership where property is owned by two or more persons at the same time. The proportionate interests and right to possess the property between the tenants in common need not be equal. Upon death, the decedent’s interest passes to his or her heirs named in the will who then become new tenants in common with the other tenants in common. Words in the deed such as “Bill, John and Mary as tenants in common” establish tenancy in common. Joint Tenancy: a form of co-ownership where property is owned by two or more persons at the same time in equal shares. Each joint owner has an undivided right to possess the whole property and a proportionate right of equal ownership interest. When one joint tenant dies, his/her interest automatically passes on to the surviving joint tenant(s). Words in the deed such as “Bill and Mary, as joint tenants with right of survivorship” establish title in joint tenancy. This form of ownership is not available in all states. Tenancy by the Entirety: a special form of joint tenancy when the joint tenants are husband and wife — with each owning one-half. Neither spouse can sell the property without the consent of the other. Words in the deed such as “Bill and Mary, husband and wife as tenancy in the entirety” establish title in tenancy by the entireties. This form of ownership is not available in all states. Community Property: this special form of ownership between spouses is only available in “community property” states. Upon death, the decedent’s interest passes in a manner similar to tenants in common. Words in the deed such as “Bill and Mary, husband and wife as community property” establish st.

What is the unlimited marital deduction?

The federal government allows every married individual to give an unlimited amount of assets either by gift or bequest, to his or her spouse without the imposition of any federal gift or estate taxes. In effect, the unlimited marital deduction allows married couples to delay the payment of estate taxes at the passing of the first spouse because at the death of the surviving spouse, all assets in the estate over the applicable exclusion amount ($5,120,000 ) will be included in the survivor’s taxable estate. It is important to keep in mind that the unlimited marital deduction is only available to surviving spouses who are United States citizens.

What is my taxable estate?

Your taxable estate comprises of the total value of your assets including your home, other real estate, business interests, your share of joint accounts, retirement accounts, and life insurance policies minus liabilities and deductions such as funeral expenses paid out of the estate, debts owed by you at the time of death, bequests to charities and value of the assets passed on to your U.S. citizen spouse. The taxes imposed on the taxable portion of the estate are then paid out of the estate itself before distribution to your beneficiaries.

Will my estate be subject to death taxes?

There are two types of death taxes that you should be concerned about: the federal estate tax and state estate tax. The federal estate tax is computed as a percentage of your net estate. Your net taxable estate is comprised of all assets you own or control minus certain deductions. Such deductions can be for administrative expenses such as funeral and burial costs as well as charitable donations. The federal estate tax currently taxes estates with net assets of $5,340,000 or greater. 

Even if you believe that that you may not be affected by the federal estate tax, you still need to determine whether you may be subject to state estate and inheritance taxes. Further, you may have a taxable estate in the future as your assets appreciate in value. You should regularly review your estate plan with an estate planning attorney to ensure your estate plan takes into account changes in the tax laws as well as shifts in your individual circumstances.

How do I name a guardian for my children?

If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve.

What does my estate include?

Your estate is simply everything that you own, anywhere in the world, including:
• Your home or any other real estate that you own
• Your business
• Your share of any joint accounts
• The full value of your retirement accounts
• Any life insurance policies that you own
• Any property owned by a trust, over which you have a significant control

Why is it important to establish an estate plan?

Sadly, many individuals don’t engage in formal estate planning because they don’t think that they have “a lot of assets” or mistakenly believe that their assets will be automatically shared among their children upon their passing. If you don’t make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets as well as higher estate taxes.
If you pass away without establishing an estate plan, your estate would undergo probate, a public, court-supervised proceeding. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them. Even worse, your failure to outline your intentions through proper estate planning can tear apart your family as each person maneuvers to be appointed with the authority to manage your affairs. Further, it is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom.

Small Business

Individual Income Tax

What is estate planning?

When someone passes away, his or her property must somehow pass to another person. In the United States, any competent adult has the right to choose the manner in which his or her assets are distributed after his or her passing. (The main exception to this general rule involves what is called a spousal right of election which disallows the complete disinheritance of a spouse in most states.) A proper estate plan also involves strategies to minimize potential estate taxes and settlement costs as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you know and trust can do that for you.