WHAT IS INCLUDED IN YOUR ESTATE AT YOUR DEATH?
This question can be answered differently, depending on what we mean by “estate”. Your “probate estate” includes all assets that are titled in your own individual name, with no joint owner and no named death beneficiary.
If the total value of your probate estate exceeds $100,000, or you own any real estate in your name alone, then opening an estate in the probate court of the county in which you resided will be required following your death. Additionally, if you own real estate in your own name in more than one state, then ancillary probate administration in such other state or states will also be required.
Your “taxable estate” includes all assets in which you own an interest, whether it is an outright interest, a beneficial interest in a trust, or a partial interest (such as a joint owner), less any liabilities or allowable deductions at your death. This includes real estate, bank accounts, CDs, stocks and bonds, brokerage accounts, mutual funds, and interests in a small business (e.g., S corporation, limited liability company or partnership), whether these assets are held in your name, in joint tenancy, or in a trust under which you are a beneficiary (e.g., a revocable living trust). Also included in your taxable estate are your IRAs, 401Ks, annuities, the death benefit of any life insurance policies owned by you, and beneficial interests in a land trust.
If your taxable estate exceeds the federal or state estate tax exclusion amounts in the year of your death, then your estate will need to pay the estate tax before any distributions can be made to your beneficiaries. For 2015, the Federal Gift and Estate Tax Exclusion is $5.43 million and the Illinois Estate Tax Exclusion is $4 million. Note that these exclusion amounts are reduced by the value of any taxable gifts that you made during your lifetime.
As you can see, it is possible to have a probate estate without a taxable estate, or a taxable estate without a probate estate. Therefore, in preparing your estate plan, you must consider both so that you can take the steps necessary to minimize your taxable estate, if necessary, and consider whether avoiding probate is something you wish to do.
We can help you sort through the different types of assets that you have, find out what is important to you, and then help you create an estate plan that will address your priorities and accomplish your goals to best take care of yourself during your life and your family after your death.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.