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Assignments, Disclaimers and Powers of Appointment
Assignments, Disclaimers and Powers of Appointment can alter the distribution of a decedent’s estate.
First what is and who can make an assignment? A person who has a vested — legally enforceable — interest in a decedent’s estate can “assign” – i.e., transfer – part or all of their interest to another. Generally, an inheritance vests upon the decedent’s death. An assignment is a gift by the assignor making the assignment to the assignee receiving the assigned interest. Assignments create tax issues for both the assignor and assignee.
For example, consider an unmarried father who dies intestate — without a will or trust – and is survived by a son and a daughter — his heirs. Prior to settling dad’s estate, the son decides to give his one-half share to his sister and signs and notarizes an assignment of inheritance rights. The assignment is then filed with the Court. Dad’s estate, less expenses and debts, is distributed entirely to the daughter.
If an interest in real property inherited from a parent is assigned then the parent child exclusion from reassessment — for local real property taxes — only applies to the interest(s) belonging to the child(ren) who do not assign their interest(s). There is no reassessment exclusion for any transfers between siblings.
Assignments, however, almost never apply to a beneficiary’s interests in a trust. Usually, a trust prohibits beneficiaries from assigning their interest in the trust before distribution. The anti-assignment provision protects undistributed trust assets from claims by a beneficiary’s creditors.
Next, disclaimers are used when a beneficiary, or heir, refuses to accept a gift or inheritance. You cannot force someone to receive a gift or an inheritance. To be valid disclaimers must satisfy the following requirements: be unconditional, be in writing, and be timely (i.e., generally, within nine months of the transfer), and, when real property is involved, also be filed with the county recorder where the real property lies. Unlike assignments, the person disclaiming their interest cannot say who receives the disclaimed interest. A disclaimer is not a gift by the person disclaiming. Lastly, one cannot have accepted any benefits from the property being disclaimed, such as the income from an income producing asset.
The person disclaiming their gift or inheritance is treated as if they had predeceased the person who made the gift. We see who is then entitled to inherit.
For example, a decedent’s trust leaves a share of the decedent’s trust estate to a named beneficiary and otherwise, if he does not survive to inherit, to the beneficiary’s descendants by right of representation. The beneficiary survives and timely disclaims. The beneficiary’s living descendants would then inherit by right of representation.
Unlike assignments and disclaimers, powers of appointment are created within a person’s estate planning, e.g., a trust or will, for future use. A power of appointment allows the power holder to say who receives a gift/distribution from a trust or an estate. The power of appointment is either a limited power that allows gifting to certain persons or is a general power that allows gifting to anyone at all, including the power holder, the power holder’s estate and the power holder’s creditors. Powers of appointment are used for a variety of estate planning reasons.
For example, a husband’s and wife’s joint estate planning may give the spouse who survives a limited power of appointment over the deceased spouse’s separate trust estate. The limited power of appointment might allow the deceased spouse’s estate to be divided equally or unequally amongst the deceased spouse’s children as the surviving spouse sees fit after the deceased spouse’s death.
Anyone who wants to proceed with making an assignment, a disclaimer or exercise of a power of appointment should consult a qualified attorney. There are tax and other issues to discuss and drafting requirements to these legal instruments that benefit from the expertise of a qualified attorney.
“Serving Lake and Mendocino Counties for nineteen years, the Law Office of Dennis Fordham focuses on legacy and estate planning, trust and probate administration, and special needs planning. We are here for you. 870 South Main Street Lakeport, California 95453-4801. Phone: 707-263-3235.”
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How To Transfer A Small Estate
- How To Transfer A Small…
How To Go About Transferring A Small Estate
Estates come in all sizes. Procedures for settling an estate may differ depending on the size, however. If you are in charge of settling a friend or loved one’s small estate, take a few moments to consider alternatives to traditional probate .
Why Use A Small Estate Affidavit?
When a simple estate has few assets, there’s often no reason to go through a regular probate proceeding. Only qualifying estates use the small estate affidavit, but they do see some real benefits.
A small estate may be settled more quickly than any other probate proceeding. Also, costs are usually lower due to the simplicity of the case.
Does This Estate Qualify As A Small Estate?
You are eligible to use a small estate affidavit if:
- The decedent’s personal property, after deducting liens and encumbrances, is worth not more than $75,000 and at least 30 days have passed since the decedent passed away, and/or
- The assessed value of the decedent’s Arizona real property on the date of death, after deducting liens and encumbrances, as of the date of death, is not more than $100,000 and at least 6 months have passed since the decedent passed away, and/or
- You are the surviving spouse and you want to use the Affidavit to Collect Personal property to collect wages of up to $5,000 owed to the decedent, and/or
- You are named in the Will to receive the property OR
- The decedent did not have a Will, but you are related to the decedent as the surviving spouse, child if there’s no surviving spouse or the spouse is not your parent or your parent had separate or community property OR
- Parent if there is no surviving spouse or child, or brother or sister if there’s no surviving spouse or child or parent; and
- If anyone with equal or greater right than you to the property has assigned their entire interest in the estate to you in writing and a copy is attached to the affidavit.
Forms You Will Need
The clerk of the county you’ll be filing can give you forms to start your small estate affidavit, or you can find them online . For example, the Transfer of Small Estate by Affidavit packet on the Maricopa County Superior Court website contains the following forms and instructions:
- Affidavit for Collection of All Personal property
- Probate Information Cover Sheet
- Affidavit for Transfer of Title to Real Property Checklist
- Affidavit for Transfer of Title to Real Property
You can download the entire packet or the individual forms. As noted on the website, make sure you get the instructions for the forms, also.
After Preparing The Affidavit
You’ll use the completed affidavit to collect any person or entity that has possession of the deceased person’s personal property . For example, cars, jewelry, stocks, cash, and bank accounts are considered personal property. You may need to pay a fee to change the title of some assets, like automobiles .
You may also use the affidavit to collect debts owed to the deceased person. Also, if you are the surviving spouse, the affidavit will help you collect up to $5,000 in wages owed to your deceased loved one.
Claiming real property may be aa little more complicated. Go to the Probate Registrar to any Superior Court location. Take along originals of the following documents:
- Probate cover sheet
- Original Will if available or certified copy of Will from the court of record
- Certified death certificate
And a copy of the closing statement if probate occurred in another county.
The Probate Registrar will issue a certified copy of the Affidavit, if approved. You may then record the certified copy in the Arizona county where the real property is located.
Even Seemingly Simple Estates Can Get Complicated
The attorneys at Keystone Law Firm know how to help you through probate and beyond. Call us at (480) 418-8448 to set up an appointment. We offer services for clients throughout Arizona, including Chandler , Gilbert , Sun Lakes , Tempe , Phoenix , Mesa , Scottsdale , and Apache Junction .
Author: Francisco Sirvent - Keystone Law Firm
Author: Francisco Sirvent - Keystone Law Firm I graduated from the University of Arizona in 2001 with a B.S. in Biosystems Engineering, first in my class. I then entered the legal profession as a law clerk in 2002 and pursued a law degree at Arizona State University, completing the degree in 2006 as one of a handful of students who also obtained a Certificate in Law, Science and Technology. I led the Elder Law Pro Bono project and Christian Legal Society student chapters, and then interned at Arizona Technology Enterprises. I now run a law firm in Chandler Arizona dedicated to helping Arizonans with their Estate Planning, Probate and Family Law needs.
Giving Up Your Inheritance: Assignment
As you probably already know, California allows you to disclaim your interest in an inheritance. Disclaiming an inheritance is simply the same as refusing an inheritance. If you disclaim your inheritance, it will be as if you “predeceased” the decedent, and the assets will be treated as though another person inherited them. In California, you can also make what is called an “assignment” if you do not want or need an inheritance. An assignment works differently from a disclaimer. Below is more about assigning inheritance.
What Is an Assignment of Inheritance?
If you receive an inheritance that you do not need or want, or if you receive an inheritance that you would prefer someone else receive, you can make an “assignment.” An assignment occurs when you transfer all or part of your inheritance to someone else.
The person making an assignment is known as an “assignor,” and the person receiving it is known as the “assignee.” Generally, an assignment is like a gift by the assignor to the assignee.
There are legal steps to be taken for an assignment to happen. An assignment is not an informal transfer. After all, transferring your inheritance to another person goes against what your deceased loved one designated or what California law requires based on familial relationships. Assignments are executed in writing and delivered to the executor of the estate. An assignment must be filed with the probate court before the transfer can be done.
If you are thinking of assigning your inheritance, you need to note that assignments create tax issues for both the assignor and assignee. Indeed, some tax issues can be avoided with an assignment, but you’d need to speak to a lawyer or tax advisor to determine the tax implications that apply to your case.
Reasons for Assignment
People assign assets for various reasons. The following are some of the reasons why people assign their interest in an inheritance;
- To avoid gift tax if they don’t plan to use the money themselves
- To exchange their inheritance for an immediate cash payment from a third party
- To give a share in the estate to an accidentally omitted beneficiary
Assignment vs. Disclaimer
As already mentioned, assignments are different from disclaimers. Firstly, when it comes to assignment, you inherit the property and then assign it. On the other hand, you do not get any share of the inheritance with a disclaimer.
Secondly, if you assign your inheritance, you can choose who gets it. You can assign your inheritance to anyone you want. On the other hand, when you disclaim your inheritance, you have no direct say in who gets it. If you disclaim an inheritance, the beneficiary or heir next in line will likely inherit it.
Lastly, there is no time frame for assignment, whereas you generally have nine months for a disclaimer.
Because there is no time frame for assignment, people who don’t want or need their inheritance, who accidentally pass the required nine months for a disclaimer, usually end up assigning their inheritance.
In conclusion, it is crucial to note that you cannot undo an assignment. In other words, transferring your inheritance rights is an irrevocable act.
Contact The Probate Guy
When it comes to assignments and disclaimers, making the right decision is easiest when you have the support of a skilled attorney. Contact the experienced and dedicated California probate attorney , Robert L. Cohen – The Probate Guy – to schedule a telephonic consultation.
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I love being a probate attorney. I love helping people through a very difficult time in their lives with the probate process. My practice focuses solely on probate matters. My job is to complete the probate process as efficiently and painlessly for my clients as possible. I have found that paying the upfront costs of probate adds unneeded stress, so I will advance all of the fees and costs for the probate. No money is required to complete the probate. I will be reimbursed at the end of the case when you receive your inheritance. Call me NOW to discuss your case for free.
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2019 Arizona Revised Statutes Title 29 - Partnership § 29-732 Interest in limited liability company; transferability of interest; rights of assignees
29-732. Interest in limited liability company; transferability of interest; rights of assignees
A. An interest in a limited liability company is personal property and, except as provided in an operating agreement or article 11 of this chapter, may be assigned in whole or in part. The assignment of an interest in a limited liability company does not dissolve the limited liability company or entitle the assignee to participate in the management of the business and affairs of the limited liability company or to become or to exercise the rights of a member, unless the assignee is admitted as a member as provided in section 29-731. An assignee that has not become a member is only entitled to receive, to the extent assigned, the share of distributions, including distributions representing the return of contributions, and the allocation of profits and losses, to which the assignor would otherwise be entitled with respect to the assigned interest.
B. An assignee who has become a member has the rights and powers to the extent assigned and is subject to the restrictions and liabilities of a member under the articles of organization, an operating agreement and this chapter. An assignee who becomes a member is also liable for any obligations of his assignor to make capital contributions.
C. Unless otherwise provided in an operating agreement, a member who has assigned all or part of his interest in a limited liability company is not released from his liability to the limited liability company under this chapter without the written consent of all members whether or not the assignee becomes a member. A member who has assigned all of his interest in a limited liability company remains a member until the admission of the assignee as a member unless otherwise provided in an operating agreement.
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