As the only things in life that unavoidable are death and taxes, what better way to produce tax revenue than to tax someone at their death? While there are no such thing as "death taxes" (that term is a political term conjured up by politicians), there are some potential taxes that may be paid shortly after a person's death. In short, there are two "death" taxing systems for Iowa residents: the state imposed Iowa Inheritance tax and federal imposed estate tax. The Iowa inheritance tax is actually a tax assessed against the person receiving an inheritance (and not the estate of the deceased person) and is based on their relationship to the decedent and the amount they receive. Spouses and lineal descendants and ascendants (children, grandchildren, parents, etc.) receive their inheritances 100% inheritance tax free. Inheritances by siblings, friends, cousins, nephews, etc. would have to pay inheritance taxes. Proper planning by a knowledgeable estate plan
Showing posts from October, 2006
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Think if you have a will or trust established that you have your estate plan completed? Guess again. If you own an asset jointly with someone else, it is possible that by operation of law that particular asset will pass automatically at your death to that person. Doesn't matter what your will provides or what a trust provides. The fact that you jointly own that asset is the "estate plan" for that particular asset. While property passing to a joint owner may fine for most situations, many "planned" estate plans have been ruined by this "quick and dirty" estate plan. What if you have children from an earlier relationship that you have provided for in your will/trust? Jointly owned asset cut those beneficiaries out of the picture entirely. Executing a will or trust is a good first step in the estate planning process. A careful and complete review of your assets and the way those assets are owned is also necessary for a complete estate plan. Contact
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An alternative to having your estate go through the probate process through the court system is through the use of a revocable trust. Sometimes also called a "living trust" or "inter vivos trust", this form of an estate plan, if properly set up, can remove the necessity of going through the probate process. A revocable trust acts as a will substitute by providing for the terms of distribution of your assets upon your death. In addition, a trustee can administer your assets during you life if you are unable to do so, operating much as a power of attorney. A trust may or not be suited for your situation. For more information. Check out this article for more information on living trusts.