Lifetime Transfers -
Subject to the limitation that gifts of Community Property should be
consented to by both spouses, any person in entitled to give as much
property as they want to any other person. There is no
$11,000.00 limitation on gifts. If a gift in excess of
$11,000.00 is made to an
individual, a gift tax return should be filed. But there is a
lifetime exemption which is now about $2,000,000.00 which covers gifts
and estates. In other words, until you have given away over
$2,000,000.00 during you life, there will not be a gift tax.
Living Trusts - The law
allows you to gift into trust any of your property. There can
be tax advantages to this if you give up control of the management
and/or ultimate disposition. One of the problems of a Living
Trust is that the property involved must be titled in the name of
the trust. If done correctly this can also avoid the necessity
of probate. Although for a simple estate, probate is often
less than $1500.00.
Life Estates - One of
the ways to transfer property, especially real estate is to reserve
a Life Estate, that is the right to reside in the home for the
remainder of your life, but give the Remainder interest. This
type of transfer has the effect of automatically transferring
property from one person to another upon the death of the owner of
the Life Estate.
Community Property Agreements
- In the State of Washington, spouses can elect by agreement to
declare their property community or the separate property of one of
the spouses. If property is declared as Community Property,
you may elect that upon the death of one of the spouses the property
automatically vests in the name of the other spouse without the
necessity of probate.
Custom Transfers -
There are many ways to structure lifetime transfers to minimize
taxes or other transfer fees and to maximize the security of
effective control. The best way to make sure you are
doing the right thing is to talk over your plan with an attorney.
Transfers at Death -
Transfers by Will - One of
the most common ways of transferring property upon death is through
a will. There are certain formalities to a will and a married
person may not will more than one-half of the community estate to
someone other than their spouse, but aside from these limitations a
person may will their property to another person, a charity or set
the property up in trust for children or other persons.
Beneficiary Designation - Almost everyone has bank accounts, stock
accounts, 401ks, Retirement Accounts or Insurance Policies that list
named beneficiaries. It is important to note that a
designation of beneficiary in such an account will take precedence
over the beneficial designation in a will. For instance an
older person may have three children and a will that gives her
estate equally to all three, but for convenience of assisting her
with paying bills, she has one of her children on her savings account
where she has the bulk of her assets. Upon death, the child on
the account may inherit the bank account and all other assets will
be divided into three shares. This is not what the decedent
Allocating Management Power -
Attorney - For reasons of physical incapacity, absence from the area
or failing mental abilities, many people designate a trusted friend
or family member to act for them with a Power of Attorney. A
Power of Attorney give the "Attorney-in-Fact" the right to
transact business in the name of the property owner. There is
a general power of attorney which allows any transaction or special
powers of attorney which are limited in scope. In order to be
effective after the incompetency of the property owner the power
must specifically provide for this "durable"
provision. Powers of attorney can be effective immediately or
you can provide that they take effect only upon incompetency.
Business Entities - For some
people it may make sense to place assets in a family owned and
controlled business such as a Corporation or Limited Liability
Company. In this way control and management can be allocated
to all members or shareholders of the business.
Health Care Decisions -
to Physicians - The State of Washington has enacted legislation that
allows a person to provide instructions to their physician that in
the event of a terminal illness the physicians to withhold life
sustaining procedures. This document is often necessary if
that is your wish because without the document the physician will be
concerned with litigation for withholding those heroic procedures.
Heath Care Power of Attorney
- A person can also give a specific Power of Attorney for Health
Care which allows another person to speak for you in making a
variety of health care decisions.