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Asset Ownership: Divide and Conquer by Stephen BeneventoŽ From the issue of Values Joint tenancy with rights of survivorship. This is probably the most common form of ownership for married couples. It is also usually the first and biggest mistake you can make if you hope to preserve your assets for your heirs or your charitable goals. While owning assets jointly may seem convenient and equitable, it often leads to substantial unnecessary taxes. This is especially true for couples whose wealth is above the applicable estate tax exclusion. The unlimited marital deduction allows a decedent to leave any amount of property to his or her surviving spouse without incurring any transfer taxes. And, each individual is currently allowed to transfer tax free $2 million* of property that is part of their gross estate to someone (a child, for instance) other than a spouse. But property in excess of $2 million that is not left to a spouse can be taxed at a rate as high as 45 percent.Equalizing and dividing ownership of assets between spouses ensures that, regardless of which spouse passes away first, both can use their own applicable exclusion. Without taking this step, a couple may simply forfeit this tax benefit, ultimately exposing an additional, and unnecessary, $2 million to the estate tax. A few simple steps, which may include the creation of trusts and jettisoning the joint form of ownership for much of your property, can mean big savings down the road. As always, we strongly recommend consulting with your tax or estate professional prior to making any decisions regarding your estate or planning goals. *The Applicable Exclusion is $2 million for 2007 and 2008, $3.5 million in 2009, $0 in 2010, and will revert back to $1 million in 2011. |
