Most estate plans are created to achieve control over your estate both while you are alive and again after your death. After your death the planning is generally designed to protect loved ones and to make certain that your assets pass to your loved ones exactly the way you want them too. In some estates, large and small, there may also be tax consequences to the death. Death taxes reach almost all estates because there are 5 kinds of death taxes:
* Estate Tax (Imposed by Federal Government on Larger Estates)
* Inheritance Tax (Imposed by State Government in Some States)
* Income Tax (Imposed by Federal and State Governments)
* Gift Tax (Imposed when we give gifts to our loved ones during lifetime)
* Generation Skipping Transfer Tax (The worst tax of all. It is like a double estate tax on certain estates.)
With all the recent changes to tax laws, and the additional changes which we know are coming, some plans which were drafted years ago have never been updated. Plans which have not been changed by their creators to take into account all of the changes in the tax world may not work as intended anymore—and your loved ones may end up looking for a way to protect themselves against the unintended consequences of these outdated estate plans. This subject is one which we have touched on before on our blog, but is worth mentioning again as we close in on 2013.
This article in the New York Times explains what it means if you disclaim (or turn down) an inheritance, and when you may want to employ this tactic. A Disclaimer is a legal “No thank you!” A loved one will disclaim an asset from an estate or trust by saying “No thank you. The assets may not help me at all.”
“Historically, lawyers have recommended disclaimers to repair estate planning oversights that bring negative tax consequences — as when families leave money to family members on public assistance. In such a case, the loved one could disclaim, so the inheritance would go to their own children instead, rather than facing the possibility of losing their public benefits.”
Although this is an interesting solution to be considered in some cases, there are no easy answers to the question of what to do when you are the beneficiary of an estate that has taken an unexpected turn. To obtain current and individualized information concerning your particular case, contact Ilene L. McCauley at 480.296.2036 or by email at Ilene@gandmlaw.net. She will be happy to assist you in sorting out the legal and personal ramifications of estate planning gone wrong.
Ilene L. McCauley and Frederick H. Goldinov are licensed to practice law in the State of Arizona. The law firm of Goldinov & McCauley, PLC provides legal services for clients in the State of Arizona. The information provided on this website and our blog is general and educational in nature and should not be construed as legal or tax advice, nor does the use of the website create an attorney/client relationship. Laws of specific states or laws relevant to a particular situation may affect the applicability, accuracy or completeness of this information which cannot take the place of one-on-one personal legal consultation and advice. Federal and state laws and regulations are complex and subject to change. No legal representation is created, and we make no warranties with regard to the information or results obtained by its use. Neither the authors nor anyone forwarding or reproducing this work shall have any liability or responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly, by the information contained in this website or blog.