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Laws governing the disposition and management of
a person's estate and the use of trusts in estates
fall under the broad category of trusts and estates.
An estate is the accumulation of tangible assets an
individual has amassed minus all of the person's debts
and liabilities. Assets can include both real
and personal property, cash, securities, life
insurance policies, automobiles, assets in trusts,
etc. Generally, an estate will pass to a
surviving spouse without probate. Subsequently,
the net assets of an estate will pass, upon death of
the estate owner, to the heirs either through the
instructions of a will or through a probate court
under the laws of intestacy. Property held in
joint ownership with rights of survivorship will
transfer immediately to the surviving joint owner.
Gift laws and taxes should be considered before
changing ownership of any large asset.
Federal estate taxes currently only apply to
estates in excess of two million dollars. The
tax is scheduled to be repealed for one year in 2010
and revert back to a one million dollar exemption in
2011.
Various types of trusts may be used by an estate to
pass assets directly to a beneficiary to avoid probate
or to defer or, in some cases, eliminate taxes.
By avoiding probate, the wishes of the deceased are
less likely to be contested and thus altered and
lengthy court battles and legal expenses are avoided.
Trusts can also be used to provide a fixed amount
of funds to a beneficiary without giving them access
to the entire trust until a certain age. Large
estate owners typically use this ability of a trust to
pass larger amounts of assets to heirs without fearing
the assets or funds will be quickly squandered or
poorly invested.
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