Recent Feedback
MOM DIED SEVERAL YEARS AGO LEAVING ALL HER ACCOUNTS POD TO THE KIDS, AND ALITTLE TO DAD. AT THE TIME WISCONSIN HAD NO ESTATE TAX AND THEY WOULD NOTBE SUBJECT TO FEDERAL ESTATE TAXES . WISCONSIN I BELIEVE WILL SUNSET THEIR EATATE TAX BACK INTO EXISTENCE ON 1/1/13. I BELIEVE ANYTHING OVER $650,000 WILLBE TAXED AT A 45% RATE. DAD IS GETTING READY TO SIGN A NEW WILL, ELIMINATINGMOM AND DADS TRUSTS THAT WERE NEVER FUNDED. I WILL BE THE PERSONAL REP AND WOULD LIKE TO KNOW WHO IS RESPONSIBLE FOR PAYING ESTATE TAXES. EVERY INVESTMENT IS POD AND I DON'T ANTICIPATE HAVING TO GO TO COURT TO DISTRIBUTEHIS ASSETS. HE IS ABOUT $125,000 OVER THE THRESHOLD,OF WHICH $50,000 IS LIFEINSURANCE, IF THAT MAKES ANY DIFFERENCE. WILL THE STATE CATCH THIS ON THEIR OWN, OR AM I LEGALLY RESPONSIBLE AS THE PERSONAL REP?
Optional Information: Country relating to Question: United States State (if USA): Minnesota
Hello,Thank you for using JA..If father's estate is worth over the state or federal estate Tax Exemption, then the estate is liable for paying any estate taxes before any remaining assets are distributed to the heirs. As the agent of the estate, the PR is responsible for payment of any taxes from the estate assets..But life insurance is not considered an asset of the estate as long as the estate is not the Beneficiary of the policy..Although the sunset provisions are supposed to cause the estate tax Exemption to revert to prior levels, I highly doubt that the politicians will let it because of the political firestorm this will cause. In certain areas, many owner's homes are worth over 1MM and if these exemptions expire, it could cause the executors and trustees to have to sell the family home to pay the taxes on it. I don't see this happening although they might scale back any exemption from the current $5.12MM federal exemption. But I would opine it wouldn't go much below the previous $3.5MM..The way father could get around this potential problem (although I firmly believe the legislators will extend the exemption) would be to gift some of his assets to the heirs now to take advantage of the current $5.12 MM lifetime gift tax exemption. He could gift some portion of his assets to the heirs and they could then gift it back later if he needed it..
.
Thanks.
Barrister
If you need further help please do not rate 2 stars/faces "Helped a little" or 1 star/face "I expected more". This is considered a negative rating against me.
Just reply to me via the “CONTINUE CONVERSATION” or “REPLY” button with the questions you have as I receive no compensation for my efforts for the lowest two ratings.
Please keep in mind that I am trying to help you understand and resolve your situation. I don't make the laws, I am just reporting or interpreting them, so the outcome may not be what you had hoped for.
. Please be patient as I am typically working with several customers at any given time. Some answers take 5 minutes, some 35 minutes. But rest assured, I will get back to you.
Please be aware that I am not entering into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of Confidentiality that attaches to any posts. With that in mind, please do not post any specific information you do not want available for public viewing. The information provided is not a substitute for a local attorney’s legal advice.
Experience: 12 yrs practice, Realtor, Landlord 23+ yrs
MY QUESTION DEALT WITH WISCONSIN ESTATE TAX ONLY AND THAT IS SET TO COME BACK INTO EXISTENCE ON 1/1/13. THE TAX
IS ON ESTATES OVER $650,000. SINCE ALL INVESTMENTS ARE
POD , DOES HIS ESTATE ACTUALLY HAVE TO GO THROUGH
PROBATE,I,E.. COURT PROCEDDINGS, IF NOT , HOW WOULD THE STATE OF WISCONSIN KNOW THAT HIS ESTATE EXCEEDED THAT THRESHOLD BY $50,000 TO $100,000?
,
No, any POD accounts would pass directly to the named beneficiaries upon the death of the owner. They would not go through any probate process..From the Wisconsin Law Journal:.
"The estate, rather than the beneficiary, is liable for estate taxes on nonprobate assets such as Payable on Death (P.O.D.) accounts, unless the decedent directs otherwise.
In a May 5, 2010 opinion by the Wisconsin Supreme Court, the court concluded that such an account transfers no property interest during the owner’s lifetime, and therefore, it cannot constitute an incomplete transfer that would make the beneficiary liable for the taxes under federal statutes.
The holding could create an absurd situation in which the estate is unable to pay the taxes. If most of the decedent’s assets are nonprobate assets passing via P.O.D. accounts, theoretically, the taxes they generate could exceed the entire value of the probate assets"
I would opine that this would apply to state estate taxes as well.
So put simply, if there is no probate filed because there are no assets in the estate, then realistically there would be no way for the state to collect any taxes or even become aware of the POD accounts.
Please be aware that I am not entering into an attorney client relationship, this is a public forum, and all posts are available for public viewing. There is no duty of confidentiality that attaches to any posts. With that in mind, please do not post any specific information you do not want available for public viewing. The information provided is not a substitute for a local attorney’s legal advice.