Two things in life are certain:
death and taxes. While you can’t do anything about death, you can plan to pay
as little taxes as possible. While there
are mechanisms in place to protect a married couple, others are left wondering,
“What happens if we live together as boyfriend/girlfriend and one of us dies?”
First, expect an estate tax that
can be as much as 60% to be due right away. As many of you know, actor Phillip
Seymour Hoffman had exactly the same issue when he died. His estate was valued
at 35 million dollars and was left to the mother of his children who was
basically his girlfriend as they were not married. Right away, his girlfriend
was left with over 15 million dollars in taxes. Had he done proper planning
ahead of time (by creating a trust), he would
have left all of his money to his
girlfriend and kids.
In Mr. Hoffman’s case, his partner
was at least somehow protected as he had a will in place. Thus, she ended up
getting something. But for many others without even a will in place, the
surviving partner does not end up so comfortable. The remaining property ends
up going to the deceased’s parents, siblings and other distant relatives. And
in New York, even having a religious ceremony does not make you a married
couple. Thus, you cannot get any protection under law.
If marriage is not for you, but you
want your significant other to be taken care of financially after your passing,
finding a reputable estate planning attorney to draft your will and trust is a
must. If you have more detailed questions, feel free to come into our office
today.
Depends on size of estate. Exemptions are such that without knowing size of estate cannot state needs tax planning. May just need revocable trust or will of a Residential Trust depending on debts.
ReplyDeleteWell Revocable Living Trust and Residential Trust is exactly what I recommend in this article. It is considered a part of any proper Estate Planning.
DeleteRight, Herman. With the large exemptions we have today, federal estate tax and gift tax are often not considerations at all.
DeleteOh, and Inna--Revocable Living Trusts are also not appropriate for all. Aside from the basics (will, POA, advance directive) there is really no document that MUST be part of a proper estate plan. They are all simply tools in the toolbox, to be used as appropriate.
Depends on what you want to have happen at death. If you both want the other to "get it all", then simply re-title everything into both names, joint tenancy with right of survivorship. Real estate deeds, bank account change of beneficiary forms, car title (CAVEAT joint liability issues for accidents, etc.), etc. This is general info and is not to be considered legal advice. Seek personal legal counsel before moving forward.
ReplyDeleteI beg to disagree with your argument. Retitling will trigger gift tax as you are giving a gift to a non-spouse of at least 50% of the value of the property and it will not protect you from probate process. I would not call adding girldriend's name to a deed proper Estate Planning at all. To the contrary it creates more problems than it solves.
ReplyDeleteYes, retitling will require a gift tax return; but the ultimate tax impact will depend on the size of the estate. Therefore, whether or not this is "proper estate planning" is a fact driven inquiry. It should not be dismissed as improper. Also, retitling in JTWROS will indeed avoid probate, at least in my state--and may reduce the state inheritance tax burden. The key for clients, as always, is to seek competent legal advice.
ReplyDelete