estate planning incorporated
Estate Planning – No Contest Clause in A Will
Estate planning is an effective measure undertaken to ensure that the assets you possess, which are usually the outcome of a lifetime of labor, are transferred to the recipients according to your wishes after your demise. To make your wishes effective, you may decide to make a will as part of your estate plan. However, before you deciding on making a will, it would be prudent to gather information on the various aspects of a will.
Firstly, a will does not automatically allow your beneficiaries to have access to or gain control over your assets, as you would like. It has to go through a process of probate that is mandatory under the law. In a probate, your will is open to challenge by anyone who can prove that he/she has a legitimate interest in its outcome. The validity of the will can also be challenged on various grounds such as the use of undue influence, diminished capacity, or fraud on the testator. Such a situation can arise especially if you have a large extended family, whether they are staying together or not, or are in close proximity, or even in touch with each other. This can put your loved ones through a harrowing experience of court litigation at the behest of unscrupulous elements that you, the owner, never wanted to benefit from your assets. The contest may be a long-drawn affair, resulting in the bulk of your estate being wasted in fees for the lawyer.
In order to prevent such an eventuality, you can incorporate a no contest clause in your will. In a nutshell, through such a clause any contestant of your will would stand disinherited or limited to receiving a mere $1 bequest or so, regardless of the outcome of the litigation. Such a clause is also known as an in terrorem clause, as it is designed to terrorize the contesters of your will into refraining from litigation lest they be disinherited or receive just a dollar even if they succeed in proving their claim.
When incorporating a no contest clause in your will, it is important that all probable contesters to your will are provided for to an extent that they would be afraid of losing if they do not win the court battle. If they have nothing to lose, or if its value is very small, they would just go ahead with the contest in an effort to gain the maximum.
But this also may not be a sure way, because the judicial view of such a clause in a will or any other instrument is not consistent in all the states. Many states have legal provisions that invalidate such a clause if the challenger of the will has a probable cause to contest. However, many states still hold the view that the last wishes of the testator should be honored, and that the no contest clause should therefore remain effective.
It would be advisable to consult you lawyer about the view taken by the judiciary in your state to examine the effects of the no contest clause in your will. There may be other ways, such as forming a trust(s), which may prove to be a better alternative to ensuring that your estate plan results in putting your wishes into effect.
About the Author
California Tax Help is easier than ever with former IRS agent and a Sacramento CPA Firm. To view our services and new articles for 2007 Estate Tax Planning please visit our award winning site http://www.april15.com.
Tax deduction for self employed realtor (auto purchase)?
I’ve purchased a new vehicle in October for my Real Estate practice. I bought it specifically because it was needed for my Real Estate career. It will be used primarily for work (90%). If I planned to use the mileage deduction for the first 10 months of the year, what kind of tax deduction can I get for this new car purchase for the other 2 months? Do I skip the mileage deduction and write off the total purchase price of the new vehicle for a one time deduction? Do I only write off 90% of the monthly car payment for the life of the loan? How do I do this? I DO know that I can write this off as a business expense, just not sure how. I’d like to get the biggest deduction THIS year, rather than depreciate it over a few years. It would be in my business expenses (not my families itemized deductions). Also, I’m just filing as self employed; I’m not incorporated. My husband has a normal W-2 taxes taken out kinda job and we file married filing jointly.
To shaydzofluv – so many incorrect items in one response….wow.
Your percentage use is determined by the mileage. It may end up being 90% but it will probably end up being something else. You need to track your miles and determine it.
Option 1) You can take the standard mileage rate (44.5 cents per mile in ‘06 and 48.5 cents per mile in ‘07). With this option you only have to track miles. This option is easier as you only have to track mileage.
Option 2) You can take a percentage of your “actual” expenses. Actual expenses are depreciation, interest, gas, oil changes, repairs, etc. The percentage is determined by your total business miles versus your total miles for the year. This method would probably give you are higher deduction in the first couple years. Obviously, this method is much more difficult as it requires you to not only track mileage but any other car related expenses.
Generally you can switch between methods each year except if you choose actual in the first year, you must stick with actual for the life of the car.
Needless to say, most people just take the standard mileage rate but, if your up to it, actual expenses may give you a bigger deduction.
Collins Financial Planning Inc
Rejected by Swiss, Ben Ali son-in-law bought home in Canada in 2008
Diplomatic cables suggest family was planning ‘ultimate’ departure from Tunisia