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Q: joint tenancy ( Answered,   2 Comments )
Subject: joint tenancy
Category: Family and Home > Home
Asked by: lealouise-ga
List Price: $20.00
Posted: 08 Apr 2006 18:59 PDT
Expires: 08 May 2006 18:59 PDT
Question ID: 716927
My mother wants to put her property in joint tenancy with herself, my
brother and myself.  Her property is in her trust, but her trust only
protects two million dollars worth of property and her property is
worth much more.  If she dies at this time, we will pay a million
dollars in probate taxes in California.  Is this a way to save our
property?  Otherwise we will have to sell it to pay the probate taxes.
 Our attorney says if we do joint tenancy, she will pay a gift tax of
a million dollars.  What can we do to keep our property and not have
to sell it.  We will loose a lot of money.  Can she sell it and buy
other property and add our names a joint tenants and not pay a gift
tax?  There must be some way to not pay the State so much.
Subject: Re: joint tenancy
Answered By: cynthia-ga on 08 Apr 2006 20:46 PDT
Hi lealouise,

It's difficult to answer, but I can give you a few ideas. The answer
my lie in whether you have children, or not, and whether you trust
them. The only way I can find to legally pay significantly less gift
tax is through what is called "Disclaiming."  Disclaiming is when YOU,
in writing, "Disclaim" your inheritance to the property. Say bye-bye,
it's not yours, --but the amount transferred to your children, or
whomever your Mother's will specifies, is free of the gift tax. The
state of California calls it the "generation-skipping" credit.

In any event, please go see an attorney that specializes in this type
of thing. A one-hour consultation will gain you a lot of insight and
give you a direction to focus.  I can only speculate as to what
*might* work in this forum.

..."The federal government has allowed people in some cases to make
gifts without having a gift tax liability. If the nature of the gift
is a qualified "disclaimer," then it is not treated as a gift. Someone
who receives an inheritance or gift, whether by beneficiary
designation, will, intestate succession, or living trust may disclaim
or refuse the inheritance or gift. If certain requirements are met,
this is not treated as a gift but is free of gift tax...

For example, John Doe inherits $100,000 from his mother's estate when
she dies. John Doe has a large estate and is making gifts to his
children to reduce the estate tax at his death. He would like this
$100,000 to go to his children. If he disclaims it, it goes to his
children and the children receive the $100,000 and there is no gift
tax involved...."

Here's some references:

The Gift Tax
Before moving significant amounts of wealth among your friends and
family, it would be wise to understand the gift tax law.

The general theory behind the gift tax 
What is a gift? 
Gifts not subject to the gift tax 
Gifts subject to the gift tax 
How gifts to minors are taxed 
Advantages of making a gift 
Disadvantages of making a gift 
How gifts affect your tax basis 
How to report and pay the gift tax 

Gifts Subject to the Gift Tax
Adding a joint tenant to real estate. This transaction becomes a
taxable gift if the new joint tenant has the right under state law to
sever his interest in the joint tenancy and receive half of the
property. Note that the recipient only needs to have the right to do
so for the transaction to be considered a gift.

Question 11 of 23 in General Gift Tax Law Questions 
What is the unified estate and gift tax credit and how does it reduce
my gift taxes?
..."Beginning in 2002, the amount you can pass tax free to your heirs
increases from $675,000 in 2001 to $1.5 million in 2004 and then
gradually to $3.5 million in 2009..."

California Estate and Gift Tax Planning: Forms and Practice Manual
This looks great.

Here's a great resource for you to peruse:

Gift Tax Law Questions

Using Life Insurance to Avoid Estate Taxes

Ways to Avoid Probate
An introduction to the most popular methods.
..."Payable-on-death bank accounts offer one of the easiest ways to
keep money -- even large sums of it -- out of probate. All you need to
do is fill out a simple form, provided by the bank, naming the person
you want to inherit the money in the account at your death.

As long as you are alive, the person you named to inherit the money in
a payable-on-death (P.O.D.) account has no rights to it. You can spend
the money, name a different beneficiary, or close the account.

At your death, the beneficiary just goes to the bank, shows proof of
the death and of his or her identity, and collects whatever funds are
in the account. The probate court is never involved..."

Giving away property while you're alive helps you avoid probate for a
very simple reason: if you don't own it when you die, it doesn't have
to go through probate. That lowers probate costs because, as a general
rule, the higher the monetary value of the assets that go through
probate, the higher the expense. If you give away enough assets, your
estate might even qualify for a streamlined "small estate" probate
procedure after your death. (These procedures are discussed below.)

If you are considering making lots of large gifts, you should know
that giving more than $12,000 to any one recipient in one calendar
year will require filing a federal gift tax return. You won't actually
have to pay any tax now.

For more information about making gifts, see the Estate Taxes area of
Nolo's website.

Hope one of these ideas pan out for you, and DO see an attorney,
there's too much at stake here. If I can assist further, please use
the clarification feature.


Search terms used at Google
California "avoid the gift tax"
Subject: Re: joint tenancy
From: markvmd-ga on 08 Apr 2006 20:09 PDT
If your attorney is a tax attorney, you might want to get another one. If 
(s)he ISN'T a tax attorney, get one.

They aren't cheap, but a million bucks buys a lot of good advice.
Subject: Re: joint tenancy
From: richardj34-ga on 21 Nov 2006 11:11 PST
you would lose the step-up in basis..........
so many variables.  follow the advice of the previous commenter, hire
a well recommended  estate/tax attorney.  maybe check out
for a cfp who can help lead you to a good lawyer.

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