10. What is joint tenancy with rights of survivorship?
It is a form of property ownership where, upon the death of one of the owners,
all of the deceased owners' interest in the property is transferred immediately
to the surviving owners.
11. Can a married couple use joint tenancy until one spouse dies, then set up a Trust for the survivor?
Yes, but this unfortunately has several problems associated with it. There is no guarantee that the surviving spouse will have time to set up a Trust after the first spouse dies, or, more to the point, will actually get around to setting up a Trust, regardless of the amount of time available. This method also loses the $3.5 million Applicable Exclusion Amount tax advantage, because, like an outright gift, joint tenancy lumps all the assets in one spouse's estate. In addition, the survivor will not see the increase in basis for the survivor's interest as would happen in a community property state.
12. What if I create a joint tenancy with my child?
This is a disadvantageous way to plan an estate. The problem with putting your child's name on the title to your property as a joint tenant is that while it will avoid probate, creditors of the child will be able to reach the joint tenancy property. It may also create a taxable gift when none is expected, and may not be consistent with your ultimately desired distribution.
13. What is a Power of Attorney?
A Power of Attorney is a document authorizing someone else (your agent) to act on your behalf (the principal). The purpose of giving someone such a power is to enable the agent to act on your behalf when you cannot act for yourself.
14. Who can create a Power of Attorney?
Generally, any individual can create a Power of Attorney if over 18 years of age, a resident of the state in which it is created, and legally competent. This, however, varies from state to state.
15. Who may act as an agent under a Power of Attorney?
In general, an agent may be anyone who is legally competent and over the age of 18. Usually, it is a family member such as a spouse or a child. More than one person can be named as an agent. However, sometimes naming two or more individuals to act together can prove inconvenient, particularly if a Power of Attorney must be exercised promptly. A better course is to name one individual as agent and then another as a backup.
16. What is the difference between a General and a Limited Power of Attorney?
A General Power of Attorney authorizes your agent to do almost everything on your behalf which you could do for yourself. A Limited Power of Attorney authorizes your agent to perform only certain acts specifically listed in the document.
17. How does an agent use a Power of Attorney?
Your agent presents the Power to the other party involved in the transaction and signs any necessary documents needed for such transactions on your behalf. Your agent normally signs his or her own name, adding thereafter "Attorney in Fact for Mary Smith."
18. What are the formalities of signing a Power of Attorney?
Requirements vary from state to state, but generally a simple notarization or signing the power in the presence of witnesses is necessary.
19. When does a Power of Attorney become effective?
This depends upon what the power says. It can be made effective at the time of signing or it can become effective at the time of your incapacity.
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