Federal And State Law Involving Real Property And Assets For Purposes Of Estate Planning

Submitted By bigboy757
Words: 2813
Pages: 12


In this paper the rule and role of both federal and state laws involving real property and assets for purposes of estate planning will be addressed. An intervivos Trust will be introduced and defined, in the use of a hypothetical scenario. will be used to show the appropriate application of both Federal and Virginia State law. The understanding of intricate estate concepts coupled with the use of applicable estate law is paramount for the efficient and fair division of assets at death.

Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored, and that loved ones are provided for in their absence. Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve many legal questions and disputes when a loved one dies. Some of those questions are: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership?
In the hypothetical case involving Jim and Jean Smith, the disposal of their estate poses quite a few challenges. Jim and Jeans estate consists of property, inheritance, business, automobiles, an insurance policy, automobiles, jewelry, stocks, and good ole cash. Distributing those tangibles is a very complex process. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. The facts in this hypothetical absolutely challenge this ideal. The size of the assets included in the estate, the plan for the children and their varying ages, and philanthropic wishes of the Jim and Jean are all variables that must be addressed in order to fulfill the requests of both parties. It will be important to look at each factor independently in order to effectively piece together an effective and efficient estate plan. Additionally, it will be important to define some terms that will be necessary in the creation of the estate plan. Included in those definitions will be the applicability of the facts within the hypothetical.
One of the best life, legacy and estate planning technique today is to use a Trust as the centerpiece for the plan. This type of planning, if done properly, can resolve all kinds of issues that otherwise would not be addressed. There are two basic types of trusts, revocable and irrevocable trusts (Dummies, 2012).
Irrevocable trusts, also known as living Trusts are the easier of the two to understand. After you place property into an Irrevocable Trust, you can't retrieve the property. For all intents and purposes, that property now belongs to the trust, not to you (CNN MONEY, 2012). With a revocable Trust, however, you can place property into the Trust and at some point in the future, undo the transfer by removing the property and terminating the trust. Here are some of the reasons why a revocable living trusts is the best way to plan:
Like joint tenancies and beneficiary designations, probate of the trust property is avoided;
Unlike joint tenancies and beneficiary designations, all of the "what ifs" in those scenarios can easily be addressed (What if a beneficiary predeceases you, such as Jim or Jean? What if a beneficiary is too young or has special needs, such as the children? What if a beneficiary has creditor or other litigation problems? Etc.);
Control remains within the family or, at least, with people or entities selected by you;
Issues of mental incapacity during your life can be addressed and handled more effectively than with powers of attorney, alone;
Management and settlement processes remain private, both during life and after death;
Costs associated with settling an estate at death with a living trust