Monthly Archives: September 2011

Executors Must Make Portability Election for 2011 Estates

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 added a new “portability feature” for estates of decedents dying after 2010 and before 2013, under which the applicable exclusion amount is the sum of (1) the “basic exclusion amount” (i.e., $5 million with an adjustment for inflation after 2011), and (2) in the case of a surviving spouse, the “deceased spousal unused exclusion amount.”  The “deceased spousal unused exclusion amount” is the lesser of: the basic exclusion amount, or the excess of the basic exclusion amount of the last deceased spouse dying after Dec. 31, 2010, of the surviving spouse, over the amount on which the tentative tax on the estate of the deceased spouse is determined.

A surviving spouse may use the deceased spousal unused exclusion amount in addition to her own $5 million exclusion for taxable transfers during life or at death.

The IRS recently issued a Notice reminding executors of estates of individuals dying after Dec. 31, 2010, that they must timely file a Form 706 tax return, in order to allow the surviving spouse to take advantage of the decedent’s unused exclusion amount.  Any attempts to make a portability election for the estate of a decedent dying on or before Dec. 31, 2010 will be ineffective.

Most married couples will want the surviving spouse to be able to take advantage of the unused basis exclusion amount of the first spouse to die.  In order to do so, a Form 706 must be properly and timely filed.  Form 706 must be filed in order to make the election, even if the estate is not required to file a Form 706 due to a value lower than the exclusion amount.

You can contact a qualified estate planning attorney at 775-688-3000 to discuss how you may take advantage of the portability election.

by: Jason Morris, Esq.

Nevada Legislature Gives Creditors the Right to Reach Non-Probate Assets

What happens when someone dies with insufficient assets to
pay his or her creditors? What if the deceased had bank accounts in joint tenancy, or gave a family member a deed to his house effective on death—thus transferring assets without need of a probate proceeding?

It used to be that creditors could not make a claim against such assets; they were limited to estate assets, or if the decedent had created a revocable trust during his lifetime, to assets of the trust. However, if the decedent titled his property in joint tenancy, so that at his death, the property would be transferred to the other joint tenant by operation of law, creditors were out of luck: there was no way to reach such an asset.

The good news for creditors is that the Nevada legislature has recently passed
legislation designed to fix this problem. If an estate has insufficient assets
to satisfy the creditors’ claims made against it, the new law will allow
creditors to recover from those who receive assets outside of probate. In other
words, if Dad left you $15,000 in a joint bank account, you cannot take his
name off the account and go spend the money, if he left unpaid medical bills
that his estate cannot pay. Either the personal representative of the estate,
or the creditor himself, can initiate a proceeding designed to recover the debt
from the proceeds in the joint account.

The new legislation goes into effect October 1, 2011. If you need assistance with this issue, you should contact a qualified Nevada probate attorney.

By Sharon M. Parker, Esq.