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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76419  
Subject: Re: Question For Intercst Date: 6/8/2013 2:25 PM
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Generally, you'll want assets to pass from your estate to your designated heirs (spouse, family, friend, charity) without have to first go through probate, where the will or the state probate laws will determine where the asset will go and for which a 1% to 5% fee (depending on the state) will be charged to the estate. The probate process can also be lengthy.

Property that is titled can do this through joint ownership, although if the joint owner is not a spouse, there may be other issues to deal with such as the % owned by the joint owner not getting a step up in basis, gifting issues and so forth.

Property that has named beneficiaries, such as IRAs, annuities, life insurance and retirement plans, will avoid probate. It is critically important that these beneficiaries, and contingent beneficiaries (if applicable) be kept current....otherwise the owner risks having the property deemed to be intestate (no owner on death) and be added to the probate estate.

Other property that is not titled to the heir or that does not designate beneficiaries, can avoid probate by being held in trust. A totten trust (transfer on death) is the easiest way to transfer taxable account balances and the simple revocable trust is a relatively easy way to transfer most everything else. But these offer the trustee no tax or estate valuation benefit, which would require more complex trusts...and there are many types.

In the far western (except OR) community property states, all community property will step up basis at the death of the owner and pass to the surviving spouse...with few exceptions. I do not believe any of the CP states require any community property to be added to the probate estate.

If this is a concern, I'd suggest speaking first with a CPA or CFP who manages estates and charges an hourly fee. This person should be able to assess your situation and make recommendations on what, if any, strategies or instrument (such as trusts) alternatives that would best meet your needs. If a trust (or trusts) are the best alternative, that person will refer you to an estate attorney to draft the trust.

BruceM
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