Memphis Parents: Graduation 2008 is around the corner…
March 31, 2008 | 1 Comment
… Have you thought of the Estate Planning needs of your 18 year old?
At the age of 18 your child is now a young adult… legally!
Your young adult needs a Simple Will, Advanced Health-care Directives and a Power of Attorney Effective Immediately and it is your responsibility as a parent to make that you both understand what these documents are.
While you probably don’t expect your young adult to stop being dependent on you, Universities, Colleges, Health-care Facilities, Student Loan Banks, Cell Phone Companies and Credit Card Companies will treat your child as an independent adult. The only way you can ensure that you will remain informed and involved on behalf of your young adult when dealing with these third parties is to have a Power of Attorney. If you want to be involved with the continuing health care of your young adult in case the become incapacitated you need to have an Advanced Health-care Directive. And if the most unfortunate circumstance should arise, you should apply the same estate planning to your young adult’s estate that you would to your own, don’t pay for the Intestate Administration during what could already be a painful situation, have a Simple Will.
The Lawyers of the Ferrell Law Firm want parents in the Memphis community to celebrate prom, graduation, 18th birthdays and college admissions. Set up a meeting with one of our lawyers and your young adult to start on the right foot for their next transition in life.
Memphis Probate and Taxes
March 28, 2008 | Leave a Comment
The lawyers of Ferrell Law Firm hope that whether you are currently planning or administering an estate, you will fine the following explanation of estate taxes very helpful.
“There are two major types of “transfer taxes”, that is taxes on the transfer of wealth, that might apply when someone dies. Generally speaking, the same taxes are applicable whether or not there is a will.”
First there is the Federal Estate Tax which is paid according to the net value of the decedent’s estate, all the real, personal, intangible and joint property that the decedent had an interest in on the day of death. The estate will be taxed according to the value of the assets on the day of death.
- Tax is only paid if the net value exceeds $2,000,000
- Along with this large exemption, there is a 100% unlimited marital deductions for the surviving spouse for all property that passes.
- And as a result, many estate pass free of the federal estate tax.
Unfortunately, without proper estate planning these exemptions, which are reserved to the individual, can be wasted and cause couples to pay unnecessary taxes when passing property between spouses. We will discuss how to take advantage of all exemptions in your estate planning session with your Ferrell Law Firm lawyer.
Second there is the Tennessee Inheritance Tax which is many respects similar to the federal estate tax. The personal exemption in Tennessee is $1,000,000 and the marital deduction is unlimited.
What happens if you try to avoid the death taxes by giving away all of your property before you die? Third is the Gift Tax which is applies to property you give during your life. There are both a Federal Gift Tax and Tennessee Gift Tax which only apply to large gifts, gifts that exceed the annual exclusion limit.
- Federal gift tax applies only to individual gifts of over $12,000, spouse may jointly or individually give gifts up to $22,000, there is no limit to the number of gifts.
- Tennessee gift tax applies in two classes of beneficiaries, Class A includes spouses, children, siblings and lineal ancestors for gifts up to $12,000 and $20,000 for a split gift and a lower tax rate. Class B includes distant relatives and non-relatives for gifts up to $3,000 per person per year.
Transfers made during life will be examined after death to determine if gift tax applied posthumously. Proper planning with your estate planning professional at Ferrell Law Firm will help you minimize this burden, maximize the benefit of annual exclusion, eliminate the burden of paying the tax, and keeping up to date on changes in the laws.
Fourth and finally, there is the Federal Generation-Skipping Tax which is a harsh, flat-rate tax of 55% (or the highest federal estate tax rate in effect at the time) imposed upon transfers during life or at death to individuals who are two or more generation levels below that of the transferor. In plain English, the most common situation is when property is passed to grandchildren. However, since there is a $1,000,000 exemption available to each transferor, the generation-skipping tax will only apply to estates worth more than $1,000,000. Generation-skipping tax is one of the most important estate planning issues that requires proper planning with an attorney who is experienced in estate planning will reduce or eliminate the generation-skipping tax in most instances. You can count on the Ferrell Law Firm lawyers to protect your assets and your good intentions.
Count on the Ferrell Law Firm to properly advise you on tax and estate planning to pass the maximum amount of your estate to the intended beneficiaries and to reduce the burden of these taxes, both during life and at death.
Source of post: Tennessee Bar Association
