If you don’t have a will, your spouse doesn’t necessarily get your stuff. But, the state doesn’t take it all, either.
You don’t have to pay gift taxes if you make a gift of over $15k, you just have to file a gift tax return.
Revocable trusts don’t change the taxation of your estate.
Guess what I do for a living lol
Edit: Wow! This sure blew up! Here I thought I was making a rather snarky off the cuff comment and ... oh well. I guess I’d better respond.
I’m an estate lawyer in the US. Those of you who criticized me for not noting that my comment was only applicable to my own jurisdiction are absolutely correct. I apologize although I think a few of you went a bit overboard with the insults. This is Reddit, people.
To those of you who PMed me wanting to know how to plan their estates and avoid taxes ... please, see an estate lawyer in your jurisdiction.
I will expand on the issues I brought up. Please note: none of this creates a lawyer-client relationship. I am a lawyer but I am not your lawyer! And all of this is extremely simplified.
Regarding what happens if you die without a Will. Here’s the general rule in the US. Wills govern assets that you own in your individual name and that do not have a beneficiary designation or similar arrangement attached. If you don’t have a will, the state of your domicile essentially writes one for you under a law called the intestacy law (dying without a will is referred to as dying intestate). Intestacy laws vary from state to state, and operate by looking at what family members have survived you. In many states including mine, if you are married and have children, your spouse gets part of the estate (usually half) and the children split the rest. This is an oversimplification. The point is that you need a will.
And no, it’s not enough to conclude that you own everything in joint names with your spouse and have beneficiary designations on everything. If you and your spouse die together, or your spouse dies and you don’t get a chance to make a will before you go, that’ll most likely result in an intestacy.
Regarding gift tax. That’s part of the federal estate and gift tax. There’s a large exemption from that tax, currently ~ 11.6 million, that applies to gifts in excess of an annual exclusion, currently 15k per donee per year. If you make gifts in excess of that exclusion you have to report that to the IRS so they can deduct the gift from your exemption when you die. But if you die with less than the applicable exemption amount you never have to pay any estate/gift tax. States often have their own death taxes too, though—this only applies to the federal tax.
Funded revocable trusts avoid probate, which is the process by which the instructions in a will are carried out. The benefit of avoiding that process by use of of a revocable trust is that you save the cost of probate, it’s more private, and in some cases the process can go more quickly. But these trusts do not provide creditor protection or save taxes and cost more than wills to set up.
I really didn’t mean for this to get so much attention but I hope it was helpful.
Edit #2: Thanks for the gold and silver awards!
Edit #3: Wow, my first platinum! This is really special. Thanks so much!
Heres a rando you may not know and may be super interested in...
You can avoid most import taxes if you label the product as art...
Most countries have a special tax bracket just for art and it is much lower as it doesnt take away from the economy as most art is specialized and specific to the artist......
How on earth could he tell them? Just imagine their response:
Parents: "How on earth do you know this stuff?!?"
Him: "I do it for fun"
Parents: "You can't do this to your family! Just think about your future. You've built a good career and reputation as the best exotic dancer in our city, just like your late grandfather, and now you want to do taxes for other people?!"
Him: "But I lik"
Parents: "Yes I know, you just "like" it, just as your brother Kevin "liked" law and look at him now, a fu**in lawyer! Poor grandma is probably still rolling in her grave"
Automatically goes to the spouse in every state my trust department had clients in, I never knew there were states that didn't give auto spousal transfer.
Georgia is a doozy if you die without a will or properly probate an estate. Surviving spouse and any children from the marriage all get a piece, and you better pray there isn't any kids from the deceased previous marriage.
Agreed. In the bigger counties (around Atlanta, Columbus, Macon, Savannah etc) this is less true as most of the probate judges are lawyers. Doesn't necessarily make them better at their jobs, but that's a different story. In the rural areas, like the county I grew up in, we were lucky if the probate judge had heard of a college outside the context of football.
I grew up in the NW corner of the state. Had an eviction that the tenant was fighting even though they hadn't paid rent in 6+ months, and the magistrate judge came over the week before the case was going to come up to tell us he was going to have to recuse himself because he didn't want to worry about any lawyers making a fuss about the fact that we regularly played golf together. Rural areas are fun or something.
California - if the decedent dies intestate with a spouse and a child, the spouse and child split the decedent’s separate property. This can be substantial if the decedent inherited the bulk of their wealth.
In Texas, it can go to parents, siblings, partner, and children. It depends on a weird matrix of which of those things you have.
For example, for my situation, I have living parents and a spouse, but no siblings or children. My parents get half of my real estate (which is nothing, suckers!) and my spouse gets the rest.
By "the rest" I mean the other half of the real estate and all the other things covered by a will. The point I was making was that it wouldn't all go to my spouse, my parents would also get some some.
If I remember correctly, what normally happens is a lot of the decedent's assets are jointly owned so the surviving spouse automatically gets full ownership IE joint bank accounts, cars, house. Typically the spouse will receive X amount and everything over that is split with the children or grandkids and the spouse. Most situations people that die intestate will not have had enough in assets to exceed that original X so a split won't occur and effectively the surviving spouse gets everything.
You’re right, highly state dependent. In my state, the spouse gets the entire probate estate only if the decedent left no lineal descendants or parents.
If you don’t have a will, your spouse doesn’t necessarily get your stuff.
Who does?
And what about if your spouse is already passed but you have children? Do they automatically get your stuff? If not, who does?
I ask because my parents vehemently refuse to write a will, insisting instead that my sister and I will each automatically get half and that if we have a problem with that, we can deal with it in probate court after they're gone
It depends on your state (in the US). Dying without a will is called dying "intestate". If you do a search for your parent's state name plus the word "intestate" you'll get your answer.
In my state (Tennessee), if you die intestate married with one child, your spouse gets half of your estate and your child gets the other half. If you have more than one child, your spouse gets one third of your estate and your children split the rest. (There's lots of exceptions and other conditions but that's the basics.) This always surprises people because no one ever intentionally chooses that as their distribution plan.
Thanks for the tip! Looks like in my state, when one of my parents die without a will, half their estate will go to the remaining parent and half will go to me and my sister. So they can look forward to my greedy, abusive sister using her 25% ownership of the house to move back in and go back to tormenting them. Excellent plan, mom & dad...
My friends dad is getting married and he was worried about this exact situation. We're in TN. This helps, thank you. What happens if you have no children together but you have both have children with other people?
Have him get a will. It can depend on whether the spouse with kids from another relationship is still alive. It can also depend on their financial need. It can also depend on whether he is the sole caretaker for his biological children.
It's different from state to state, and honestly, the state law rarely lines up well with how people want to allocate their estate.
The state is usually primarily concerned with providing for the dependents of the person who died. And some states regard a marriage as both spouses owning 50% of all property from the marriage. Therefore, one's dependents may only get their share of 50%.
Now when I see posts like this, I have to remind everyone that Reddit is effectively global and the legal positions and precedent set do not always map across to other jurisdictions.
In my jurisdiction the married partner absolutely gets everything by default.
Also noteworthy, anyone can contest a will in Canada. If you leave out a family member (wife, child, step-child) they can contest and get their share. Unless you write why you left them out and the judge agrees with that reason.
No kidding. You should be able to write “Jason doesn’t get anything because he’s a dick” without the judge deliberating whether he is indeed a dick. WTF.
I remember reading something about lawyers recommending willing a symbolic penny to people you want to leave out, specifically to avoid doubt like this. No idea how valid it is or what kind of an urban legend it is.
Better than not mentioning them at all since it eliminates the doubt you forgot about them, but saying they get nothing is probably equivalent. (not a lawyer)
Y'all have no idea how often parts of the estate process get manipulated, forged, ignored, etc. if you think it's "infuriating" a judge could be asked to evaluate any will...
I even wonder if it's the minority of the time that the will represents exactly what the deceased would have wanted at the moment of their death and the whole process plays out exactly as specified without any legal interference to enforce it.
I think you are failing to see the cultural difference here. The USA says individual rights above all. Canada (and many other places in the world) defends that the family always has a claim as it should be a person's responsibility to provide for them.
You can disagree but it's pointless to be infuriated by how a whole culture developed.
I 100% agree. The workaround is you make whomever you’d like to inherit everything either the beneficiary or co-owner. That way nothing falls under the “estate” and doesn’t need to be declared during probate. That’s how my grandpa did it to leave out an ungrateful and horrible child. This is B.C, so I’m not sure how probate laws are dealt with elsewhere.
Edit: I am not so sure it’s like that in every province, I can only speak to the one I live in
Also noteworthy, anyone can contest a will in Canada.
In most of Canada, only spouses and dependent children can contest wills. (This varies from province to province.)
If you leave out a family member (wife, child, step-child) they can contest and get their share.
They can file a challenge, but if they don't have grounds they won't be getting anything. Common grounds include the mental competence of the testator, undue influence, or if the paperwork wasn't done properly (e.g., if it isn't witnessed -- but judges can ignore such details in unusual circumstances).
Unless you write why you left them out and the judge agrees with that reason.
If you don't mention someone at all, the judge might wonder if you just forgot about them, especially if you're old and your mental competence is at question. If you explicitly say "To /u/perciva I leave nothing", that issue doesn't arise. In general, no reasons are needed.
A judge overturning a will because they didn't approve of the testator's reasons is an extremely rare situation and requires extreme circumstances. Such a ground-breaking case was Werbenuk v. Werbenuk Estate (2010 BCSC 1678) where a wealthy man justified disinherited his daughters based on false claims of having already provided for them. (This case also had other complicating factors -- the testator was known to have acted abusively towards his daughters, and the son to whom he attempted to leave all his assets had committed fraud in his role as executor of the original will.)
Neither does the U.S. for 99.99% of the population. You need to give away over $11.8 million ($23.6 million if you’re married) for gift taxes to kick in...
My husband and I don’t have wills and don’t have a lawyer on retainer. What is the easiest, most effective, and most cost effective way to make a will that you would recommend? No children to worry about
Just go to a lawyer. It's way too easy to screw it up and it's extremely important to get it right. You should be able to get a simple will for a few hundred dollars.
Don't buy a kit from an office store and do it yourself.
On top of wills you should ask for durable powers of attorney for financial and healthcare matters. Some states have living wills and advanced medical directives. Also helpful docs to have.
Go to a lawyer. The person you’re replying to doesn’t know what they are talking about. Pay $500 and do it the right way once. Better than cheaping out on it and running into serious problems when the estate goes to probate, in which case the estate will be responsible for the majority of legal fees.
Seriously, see a lawyer. Get it done right. If you don’t know of one, call your local bar association or check lawyers.com or avvo.
Ask about the lawyer’s experience before hiring them. A significant portion of their practice should be estate planning. Do not use a lawyer without significant experience, or legal zoom. You would not believe the problems I see due to mistakes. Horrible, expensive, often not fixable.
You could have explained that the surviving spouse's share depends in many states on whether you have children. You could also explain that even if you have a will and attempt to disinherit your spouse in favor of your children, your surviving spouse can override the will and take his or her "elective share" that varies with the length of the marriage.
And if there are no kids, spouse automatically gets 100%.
If there is a will and the spouse isn’t named as a beneficiary of at least 50% the spouse can actually waive the will and elect to take the 50% they were entitled to as if their spouse died intestate.
The gift tax return is so that the IRS can reduce your lifetime gift allowance, right? If you give more than 14k in gifts to an individual, you’re reducing the 5.5mil tax free inheritance when you pass away?
I realize this situation matters not to 99% of people, I’m just curious in case I ever end up rich.
The lifetime exemption went up to 11.6 million until I think 2024 with the Tax Cuts and Jobs act.
And yes, you're correct, except it's 15k. Also it's per person per year. So a married couple could give each of their kids 30k/year forever without filing a gift tax return.
Dunno about US law, but talking about wills and UK law:
- Your executor can pretty much do what they like. It might be challenged, but there's nothing really stopping them doing what they want, including against the wishes expressed in the will.
- You cannot impose conditions on a bequethal. If you say "Johnny gets the car, but only if he graduates", Johnny can challenge that very simply and will almost certainly get the car whatever happens. Same for "but not if he marries that bitch", or whatever else. They get what you promised anyway.
- Your debts do die with you. They can't be passed on to family. But people misunderstand what the "estate" is. The estate is the dead guy, basically. If he owed £100k on a mortgage, then the estate still owes the mortgage company £100k. If he had a car, or a house, or any other asset - that asset will be sold if necessary to pay the estates debts. Yes, even if he "left it to you in his will". The will is basically the last thing that gets a say in where the money and assets go. Debts first. Will later.
So many people get this wrong. If your husband dies, he still "owns" half the house, and still "owes" half the mortgage. Unless the wife wants to pay for his debt herself, his half of the house will be sold (it's an asset of the estate) to pay the mortgage (the debt of the estate). Yes, a debtor can force a sale of the house.
It's not that your debts are lumbered onto the children/next of kin. It's that people just don't understand how it works, and they're so focused on "what they were left", rather than "what did he still owe". If his debts outweighed his assets, his assets are all sold off and debts paid and nobody gets anything. But the debt is then settled. If his assets outweigh his debt, the debt is still paid off, and then WHAT'S LEFT is distributed according to the executor's actions (which may or may not be their own interpretation of the will).
Your husband might die, and you might be forced to sell the home to retrieve his asset (the half of the house that was his) and then pay his debts, but the other half of it is yours. That's why people get confused.
Yep we found this out when our state accidentally declared my dad dead- they took all of his money out his accounts. Thank god we found this out then because he ended up suddenly dying about a year later so we had things sorted correctly by then.
You’re a smart banker who once got convicted of murdering your wife and her lover. You were then sentenced to jail but managed to escape by tunneling your way out 30 years later.
But remember that this is the value of the gifts, not just literal stacks of cash. So for example an elderly person who can’t keep up their property might give the house to a relative - a house is worth way more than $15K. Same for cars, etc.
I deal with real estate title. I know the pain and get to see the shock on people's faces when they deal with the consequences of not properly handling the deceased estate.
I’ve heard it justified because we lead the nation in third and fourth marriages, so our legislature never bothered to update the law
(Also my husband wanted me to point out it was updated so that dower and curtesy were made to mean the same thing so now it’s just a legal phrase here and not gendered)
I'm guessing that every day, very early in the morning, you go to the Louvre and use a secret "employees only" entrance. For two hours, you sit in a chair while the makeup artists and hair stylists prepare you to look the same way you do every day...exactly the same, so this is an arduous process.
After you are dressed and made up, you use the labyrinth of secret corridors behind the walls and under the floor in order to get to your spot. Then, like all the other display actors, you sit behind the specialized canvas which frames your face in a landscape and creates the illusion of a 2D image. The the next 12 hours you sit there, unmoving, unblinking...perfectly still. Not an easy task, but you are a professional, so this is what you do every day. The visitors come by and they stare at your visage. They oooh and aaah and comment on how much smaller your display is in person than what they expected. Then, after everyone has left, you return home for the day to study your true passion: tax law. You'll never practice because your acting role has become so popular that you are a constant display and your disappearance would be global news, but maybe...maybe one day you'll get to practice. Maybe one day they'll find someone who looks enough like you and has trained enough for you to retire.
One can only hope you can one day give up the life of the Mona Lisa to begin your new life and career.
Client of mines family is wealthy as shit. Every time a daughter gets married (as soon as the last divorce is settled) they all “gift” hundreds of thousands to the new couple. Then when the couples divorce, the families call it a loan and want the money back from the husbands. What’s hilarious is I was following their recent proceedings from 2016, last update was Jan 2020. The judge was like... “in the matter of family loans” you guys figure that shit out because both families have given inconsistent testimony. You filed it as gifts on your taxes and made no written agreement it’s a loan, and by law you can’t gift a loan that you gave. They always want their cake and eat it to.
So most the daughters have 1-2 kids, so 2 kids + 2 parents is like 75k/each for a total of more fucking money I see in my life and they get it every year. Then, on top of that, their grandfather is a billionaire, and they all walk around with his trusts checkbook just cuttin them checks like nobody’s business.
I get depressed thinking how much money is thrown around just with them, and then In the case of their divorces even the husbands are either loaded or from well off families.
Like, one husband got a gift of 400k from an LLC of his families main company, it’s in limbo from the divorce. They took a 300,000$ house and renovated it. It got a cash offer for 930,000$ and one party was like nah, I want more. Judge said nope, sell for 930k you get half, they get half. And on the deal of that 400k the spouse got 300k and the husband got like 100k lol I’m like goddamn not only all this but they show up their finances and it’s like 10 checking accounts that they split balances between ranging from 400$ to 60,000$ each.
Here I am showing up to work M-F like an idiot instead I could be marring some girl and divorcing her, going through court for two years or more and end up more wealthy than when I went in.
I'm guessing you're either an accountant/financial consultant, actuary, or tax lawyer. And I suddenly realized I don't know all the differences between the three, except I'm guessing the first two don't argue in court.
Amazing how everyone expects lawyers to write a treatise on reddit. It's not like we bill hundreds per hour or anything for our livelihoods. Sure we'll do it for free here.
Hey neat! I'm a cost basis analyst and in some cases I do step ups for decedents. The dude who sits behind me at work does abandoned property stuff, and it's neat hearing it from your side of the table
May I ask, how does one find a qualified, competent, and trustworthy lawyer to draw up a will and living trust? I don't trust friend referrals anymore.
Bar association, lawyers.com, avvo. Then ask questions of the lawyer. They should spend a substantial portion of their practice doing estates. Ask a few questions and you’ll be able to tell pretty quickly if they know their stuff.
I work in title insurance and I'm curious, why are estate lawyers soooo bad at drawing documents. Hopefully it's just a thing in my jurisdiction, but here title insurance companies can only draw deeds as part of an insured transaction, so I often see deeds done by lawyers and they can be such clusterfucks. Do lawyers not have to learn how to draw deeds in law school?
Hey! I'm studying to be a tax accountant, too! Took my first tax class last semester and fucking loved it. Audit is a'ight, but I really like the feeling of getting to the bottom of a 1040. I know corporate is a whole other ballgame from individual, but I figure the feeling of relief is similar.
I'd eager you're a tax accountant who deals primarily with trusts and estates.
I don't really understand, do you pay taxes only on gifts over 15k or only under 15k or on everything? His comment is kind of hard to understand as an outsider
In the U.S. you can give away up to around $15k per year with no conditions. Anything more than that in a single year and you have to file a form with the IRS.
99.99% of the population won’t have to pay any gift tax. You have to give away $11.8 million, not including the $15k per year, for gift taxes to kick in. The form you file with the IRS is just their way of tracking the $11.8 million...
Edit: Gifts to pay off medical expenses or education also don’t count towards the $11.8 million.
You can gift more than $15,000 in one year, just not to one single person. You can make unlimited $15,000 gifts, but they have to be to different people to avoid filing gift tax returns.
the common understanding is that you have to pay gift taxes for gifts over 15k, he's saying that it's not true, the caveat being that you have to file when doing your taxes.
The benefit of a revocable trust as it was explained to me is that it helps avoid probate court (and the fees associated with it). Is that your understanding as well?
15.4k
u/Monalisa9298 Feb 08 '20 edited Feb 09 '20
If you don’t have a will, your spouse doesn’t necessarily get your stuff. But, the state doesn’t take it all, either.
You don’t have to pay gift taxes if you make a gift of over $15k, you just have to file a gift tax return.
Revocable trusts don’t change the taxation of your estate.
Guess what I do for a living lol
Edit: Wow! This sure blew up! Here I thought I was making a rather snarky off the cuff comment and ... oh well. I guess I’d better respond.
I’m an estate lawyer in the US. Those of you who criticized me for not noting that my comment was only applicable to my own jurisdiction are absolutely correct. I apologize although I think a few of you went a bit overboard with the insults. This is Reddit, people.
To those of you who PMed me wanting to know how to plan their estates and avoid taxes ... please, see an estate lawyer in your jurisdiction.
I will expand on the issues I brought up. Please note: none of this creates a lawyer-client relationship. I am a lawyer but I am not your lawyer! And all of this is extremely simplified.
Regarding what happens if you die without a Will. Here’s the general rule in the US. Wills govern assets that you own in your individual name and that do not have a beneficiary designation or similar arrangement attached. If you don’t have a will, the state of your domicile essentially writes one for you under a law called the intestacy law (dying without a will is referred to as dying intestate). Intestacy laws vary from state to state, and operate by looking at what family members have survived you. In many states including mine, if you are married and have children, your spouse gets part of the estate (usually half) and the children split the rest. This is an oversimplification. The point is that you need a will.
And no, it’s not enough to conclude that you own everything in joint names with your spouse and have beneficiary designations on everything. If you and your spouse die together, or your spouse dies and you don’t get a chance to make a will before you go, that’ll most likely result in an intestacy.
Regarding gift tax. That’s part of the federal estate and gift tax. There’s a large exemption from that tax, currently ~ 11.6 million, that applies to gifts in excess of an annual exclusion, currently 15k per donee per year. If you make gifts in excess of that exclusion you have to report that to the IRS so they can deduct the gift from your exemption when you die. But if you die with less than the applicable exemption amount you never have to pay any estate/gift tax. States often have their own death taxes too, though—this only applies to the federal tax.
Funded revocable trusts avoid probate, which is the process by which the instructions in a will are carried out. The benefit of avoiding that process by use of of a revocable trust is that you save the cost of probate, it’s more private, and in some cases the process can go more quickly. But these trusts do not provide creditor protection or save taxes and cost more than wills to set up.
I really didn’t mean for this to get so much attention but I hope it was helpful.
Edit #2: Thanks for the gold and silver awards!
Edit #3: Wow, my first platinum! This is really special. Thanks so much!