Many Husbands and Wives own title to their home as “Tenants by the Entirety” or as “Joint Tenants with Rights of Survivorship.” Often they’ve been told that it’s a cheap and easy way to avoid probate and are shocked to discover that it doesn’t. The catch here is that rights of survivorship—whether through Tenants by the Entirety or by Joint Tenancy—only delay probate until the death of the survivor. When the first spouse passes away
“Thou know’st ’tis common; all that lives must die, Passing through nature to eternity.”
-William Shakespeare (Hamlet)
Death. This is a difficult topic to think about. Most of us spend most of our lives enjoying work, hobbies, friends and family. We engage in diversions to avoid thinking about this inevitability. And yet, this is a bridge that we all must cross someday. Some of us are meticulous planners and dictate exactly what should happen upon our passing, such as
photo by: amslerPIX
Last month I wrote about the pitfalls of giving your home away without protecting yourself. We came to the conclusion that if you think you have 5 years of good health when you can still live at home before you might need nursing home care, it can be a good idea to transfer your home to your children or other loved ones while keeping a life estate for yourself (and for your spouse) so that you can’t be kicked out of your home.
I left you with a teaser saying that I’d reveal to you why giving
We all know that the possibility of incurring disastrous Nursing Home costs is the biggest threat to most people’s estates today. Now that we have an exemption of $5.25 million from estate taxes, only the wealthiest 0.14% of Americans will pay this tax. In other words, 99.86% of us don’t have to worry about the estate tax anymore. What about probate? You may have heard horror stories from the 1980s about probate costs eating up half of the estate.
TAX IDENTIFICATION NUMBERS
Ethan R. Okura
Back in June, I wrote an article on how Obamacare affects the income taxes that trusts pay. It’s a very complicated subject (taxes always seem to be, don’t they?) and my quick summary of how it works may have left you with more questions about how trusts are taxed than you had before you read the article. Today I’m going to explain how Tax Identification Numbers work, both for Trusts and for other business entities.
Generally, your personal Tax
HOW TO TITLE REAL ESTATE:
LLC, Revocable Trust, Personal Name?
Ethan R. Okura
For many people—especially in Hawaii—real estate is the most valuable investment they own and the largest part of their estate. There is so much advice and mis-information floating around about what is the best way to own real property. Today I will talk about different entities and tenancies and how each applies to owning different types of real estate.
HOW DOES INCOME TAX WORK WITH MY TRUST?
Ethan R. Okura
Last month after writing my article on Medicaid planning techniques, we received a message from a concerned client who is worried about higher income tax rates, the new 3.8% Medicare (sometimes called Obamacare) Surtax, and in light of these developments, whether a trust is still the right solution for his family’s needs. Perhaps he read a Forbes magazine article with an alarming title “Tax Hikes Hit Trusts Hard, Beneficiaries Pull
ANSWER: Ethan R. Okura, Attorney Specializing in Estate Planning (Trusts, Wills, Medicaid Planning & Probate). No, a revocable living trust will not protect your assets from lawsuits. You can cancel your revocable trust and get assets out of the trust at any time. Therefore, your creditors (people to whom you owe money) can also get assets out of your revocable trust. An irrevocable trust (one that you cannot change or cancel) can protect your assets from lawsuits. Generally
UNDERSTANDING REVOCABLE LIVING TRUSTS
Trusts began in England in the Middle Ages. The Statute of Uses is a law enacted in 1536 under King Henry VIII. The Statute of Uses is the basis of trust law in England. From England, the concept of trusts came to America with the colonists. Thus, even though most of us have been hearing about trusts for only the last 10 or 20 years, trust law has been established for centuries.
A trust is created by a legal document which is usually called a “trust
HAWAII ASSET PROTECTION TRUST
Sanford K. Okura
On July 1, 2011, the Hawai‘i Permitted Transfers in Trusts Act was amended. This is an important change in the law because you can now transfer assets to a trust and receive money from the trust and yet have the trust assets protected from lawsuits.
Under the new law, if you transfer property to an asset protection trust and you have no intent to “defraud