Estate Planning
Assets Included in Your Gross Estate
Upon your death, your gross estate for Federal estate tax purposes will be determined by the fair market value of property which you "own", at the time of your death. The Internal Revenue Code contains a number of complicated rules for determining what you own, but the major categories of property included in your gross estate are as follows:
(a) Solely Owned Property: The full value of property titled in your sole name is included in your gross estate. This would include bank accounts, real estate, stocks, bonds, cars, boats, jewelry, furniture, and all qualified plans (i.e. IRA's, 401(k)'s, etc.
Note: Solely owned property will be included in your probate estate and administered by your personal representative or executor in accordance with the provisions of your will.
(b) Joint Property: A portion of the value of property titled in "joint tenancy with right of Survivorship or in "tenancy by the entireties" is included in your gross estate. If the joint owner is your spouse, fifty percent (50%) of the value of the joint property is included in your estate. If you own joint property with persons other than your spouse, the portion of property included in your estate is determined by the relative contributions made by the joint owners in acquiring the property.
Note: Jointly owned property will not be included in your probate estate. It will pass automatically to the surviving joint tenant by virtue of the survivorship provisions of the joint tenancy.
(c) Trust Property: The full value of property which you have transferred to a revocable trust or to a trust in which you have retained a beneficial interest will be included in your gross estate. This would not include an irrevocable trust in which you retained no interests.
Note: Trust property will not be included in your probate estate. It will be administered by your successor trustee in accordance with the provisions of your trust document.
(d) Pensions and IRA's: The full value of IRA's, 401(k)'s, survivor pension benefits and other employee benefits payable by reason of your death will be included in your gross estate.
Note: Pensions and IRA's are distributed to your beneficiaries in accordance with your most recent beneficiary designation form. They are generally not included in your probate estate unless the "estate" is named as beneficiary.
(e) Life Insurance: The full "cash-value" proceeds of life insurance policies, which you own or in which you have an "incidence of ownership" (such as the right to designate a beneficiary) will be included in your gross estate.
Note: Life insurance "death benefits" proceeds are generally not included in your probate estate. They are distributed to your beneficiaries in accordance with your most recent insurance policy beneficiary designation form.
The aggregate fair market value of these property interests will constitute your gross estate for Federal estate purposes.