KEY DOCUMENTS
What are the differences between a will and a living trust?
A will goes into effect after death; a trust is effective during life and can avoid probate.
What is the key difference between joint tenancy with right of survivorship and tenancy in common?
In JTWROS, property automatically passes to the other owner at death of first owner.
What is the current annual gift tax exclusion?
19,000
What is the difference between a revocable and irrevocable trust?
Revocable trusts can be altered; irrevocable cannot be changed once established.
What is a donor advised fund?
A DAF is a charitable giving vehicle where donors make a contribution, receive an immediate tax deduction, and recommend grants to charities over time.
What is the main purpose of probate?
To validate the will and oversee distribution of assets.
Two documents that are part of an advanced directive.
Living Will and Healthcare Power of Attorney
Tell me features of community property with respect to estate planning?
Each spouse owns half; the entire property receives a basis adjustment at death.
When must a gift tax return be filed?
If a gift exceeds the annual exclusion and is a non-exempt transfer.
What is the main tax benefit of an irrevocable trust?
Assets are removed from the taxable estate.
How does a charitable remainder trust work?
It pays income to beneficiaries for a period, then the remainder goes to charity.
Name one way to avoid probate.
Using a living trust or beneficiary designations.
What happens if someone dies without a will?
State intestacy laws determine distribution of assets.
Can a TOD (transfer on death) account avoid probate?
Yes, it transfers directly to the beneficiary.
Name two types of payments that do not count as taxable gifts.
Direct medical or tuition, child support, alimony, support.
How can a trust help with spendthrift beneficiaries?
Why might someone donate appreciated stock instead of cash?
To avoid capital gains tax and still receive a charitable deduction.
Why might probate be considered undesirable?
It can be time-consuming, costly, public.
What is the main purpose of a power of attorney?
To authorize someone to manage financial or legal matters.
Which type of ownership passes automatically at death?
Joint tenancy with right of survivorship.
What is gift splitting and who can do it?
Spouses can elect to treat a gift as made half by each, doubling the exclusion.
Who holds legal title to assets in a trust?
The trustee.
What is a qualified charitable distribution (QCD)?
A direct transfer from an IRA to charity, not included in taxable income.
What role does the executor play in probate?
They manage the estate and carry out the will's instructions.
Name a document that becomes active only upon incapacity.
Springing power of attorney
What kind of property interest allows unequal shares?
Tenancy in Common
What form is used for gift reporting?
Form 709 US Gift Tax Return
What is the role of a trustee?
To manage trust assets and act in the beneficiaries' best interests.
How does charitable giving affect estate taxes?
It reduces the taxable estate, potentially lowering estate tax liability.
How long does probate typically take?
Several months to over a year.