Moving in property taxes, with a bypass trust

To begin, a few words about the Federal inheritance tax.

The estate tax is a federal tax imposed on the high property (the total of goods and other property) of a deceased person. Currently, the tax rate is 45%, which means that, net of exemptions would have almost half of the assets taken by the government. Fortunately, some important exceptions to property tax are:

- Spousal exemption - the property of the estate passed to his spouseconsidered exempt from inheritance tax

- Exemption for charity - in the same way, the property left to a qualified charitable organization is exempt from inheritance tax

- Standard Exemption - Federal law provides for an exemption of $ 2,000,000 based on all goods, in addition to the above exemption in two. This base amount will increase to $ 3.5 million in 2009.

Given this information, the avoidance of inheritance tax seems simple enough, right? Just leave your entire estate to his spouse orwoman, and you can easily and legally circumvent the whole problem - or so it seems.

But what about the future? If you have a $ 4,000,000 estate to your wife, what happens when your wife dies? Say, for example, left his entire estate to your children - not an unusual decision. Unfortunately, only the $ 2,000,000 exemption applies in this situation, which means that 45% of the remaining $ 2,000,000 would be taken by the government, instead of your children. How to prevent thissecond round of taxes?

Creation of a bypass trust

A bypass trust, the right is a trust designed to ignore the property taxes of the beneficiary. As such, the bypass trust are extremely useful for the smart estate planning. Let us return to the example above. We know that if you find a $ 4,000,000 estate left to your wife that same site will be subject to tax when the wife dies and tries to pass the property on your children.

With a bypass trust, both you andYour wife may avoid estate taxes. Here's how it works: instead of simply passing your property $ 4,000,000 for her, passing on only $ 2 million, and place the remaining 2 million in a bypass trust. After exemptions and no tax on capital: the trust is exempt under the rule, while the remaining assets pass under the marital exemption. The key is that when his wife dies, so they can be kept the same $ 4,000,000 to your children tax-free: the bypass trust is exempttaxes, and the remaining properties can take advantage of the exemption standard.

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Buy To Let Property Insurance

Buy-to-let property insurance, some times also known as residential property owners insurance, is needed if you own houses and/or flats to tenants - either on a short-term or long-term basis. Ordinarily you can buy cheap buy-to-let property insurance in the event that you rent five or less properties in the UK than is the case if you rent more than five properties, as in the case of the former you are seen as a small time landlord with a small business, whereas in the latter you are seen as a full blown property-owning company.

Whether you plan to rent five or less properties, or five or more properties, is, however, a side issue, as in both cases you'll need to ensure that you have at least the minimum level of required insurance in order to protect yourself. Consequently, the number of properties you own will have a bearing only insofar as the insurance premiums are concerned. That said, if you are looking to become a property owner with a letting business, then you need to ensure that you have the following minimum provisions in your insurance policy:

Fire

Insuring against any fire on the property

Natural Disaster (also known as tempest insurance)

Insuring against natural disasters that may occur, such as a storm where the winds tear off your roof or guttering

Theft

Which is especially important if you are renting out fully furnished properties. In the event that you are renting out unfurnished premises, you may wish to have a discussion with your tenants about whether or not they should have home contents insurance

Public Liability Insurance

This should be a must as it will protect you against any claims your tenants or any third parties (such as their guests) may have for injuries they suffer while on your property

Lost Earnings

There may well be times when your property remains empty; say, for example, while you look for new tenants. If you are relying on the rental income from your tenants to repay the money you borrowed to purchase the property, you need to ensure you have lost earnings insurance to compensate you during this period

Employee Liability Insurance

If you have employees who will visit the property for you to repair any damage, etc. or to collect the rental payments, then you need to make sure that you have employee liability insurance in case they get injured while carrying out their assigned task

Legal Expenses Insurance

As a property owner you may find the need from time to time to retain the services of a lawyer; for example, if your tenants refuse to pay their rent or move out of the property at a specified agreed time - when you may need to get an eviction notice. As legal expenses in the UK can be expensive, you should consider insuring against this risk by having in place a provision of legal expenses in your insurance policy.

Although the above are basically the bare minimums you need in your buy-to-let property insurance policy, you can also tailor these types of insurance policies to meet your particular needs, so make sure that you talk through your circumstances with your insurance provider, especially if you anticipate expanding the business in the near future.

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Probate Law - Protecting Your Property After Death

Probate law is a part of the law that many of us rarely think about, mostly because it is a legal process dealing with a particularly unpleasant reality. Probate law is the area of law which concerns administering estates and handling final wills. A probate is responsible for interpreting the final will of the deceased, naming the executor of the estate, and determines the interests of the heir and any other claimants against the estate. Although it may be uncomfortable to think about, knowing about the law which will govern your estate after you pass away is important for your family and the loved ones you leave behind.

In states with communal property laws, an estate without a legal will is automatically passed to a spouse. Being without a will is called being intestate. However, when the property does not automatically transfer to the spouse, a court is required to probate the estate, which involves determining the intent of the will and distributing the property. It's very important to have a valid, up-to-date will, as this will ensure that your property is distributed in the manner you want. The general requirements for making a will are:

Identifying yourself as the author of the will.



You must make a point of revoking all previous wills and testaments. If you do not specifically include this point, the will only revokes previous testaments if there are any explicit inconsistencies.



You must show that you are legally able to dictate the division of your property, and that you do so by your own choice and without duress.



You must explicitly name an heir or multiple heirs in the document.



You must sign and date the will, with two witnesses who do not stand anything to gain from the will. This ensures that there is no collusion or foul play.



You must sign the document to prove that it is valid.

It's also a good idea to name an executor on the will. The executor is personally responsible for making sure that the instructions your detail in the document are carried out. If there is none named, the probate court will appoint one.

If you have any other questions about probate law and how it affects your will and your heirs, visit the Austin family lawyers of Slater Kennon & Jameson, LLP, today.

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