On Wednesday 27 February 2008, jonathon wrote:
> Hal wrote:
> > Since there was no will, if it had not been for those TWO good
> > lawyers we had,
>
> Make that two excellent lawyers.
I won't quibble on that term.
> When a person dies without a will, it is all to common for the family
> to lose everything ---either directly, because the state claims
> priority, or indirectly, because of taxes.
Actually, and I'm not sure how much of this is state law and how much is
federal law, but if you're married there are no taxes if it all goes to
your spouse. The problem comes when your spouse dies if anything is
going to others. This part, I know, is federal: The inheritance tax is
now 45%, with certain exceptions. A person can leave a set amount to
people outside his/her marriage without it being taxed, but anything
above that is taxed at 45%. If it all goes to their spouse, then when
the spouse dies, they have that same limit.
That means the spouse can leave the same amount death later. Here's the
problem: If the husband dies first and leaves it all to his wife (which
will happen without a will), then the wife dies, her estate is bound by
that limit. If, however, when the husband dies, he leaves that amount
to his kids, AND when the wife dies, she can leave the same amount,
then they have successfully managed to leave double the amount to their
kids without paying taxes.
In other words, if the husband leaves as much as possible to the kids
and the wife does the same, that's twice as much that won't be taxed as
it would be if it all stays with the wife (or whomever the surviving
spouse is) and only the wife leaves what's left to the kids.
Then we had a mess because my sister is my Dad's step-daughter, so she
wasn't in the line-of-succession (yes, it's a mess, like tracking down
heirs to the throne) so we had to do some legal maneuvering so things
would be split between us instead of all going to me.
> If you own anything that can be inherited, make a will for somebody
> to receive it.
YES!
It is a real mess!
I'm 45, in reasonably good health (other than being overweight, in
pretty good health), don't smoke, drink red wine at times, and enjoy
exercise, go ballroom dancing 4-5 times a week, have no kids or wife,
and I still made sure my will and the appropriate trusts are set up.
After what I saw, there is no way I can stress enough: Know what you
have in terms of assets, including life insurance and MAKE OUT A WILL!
Hal
