« »

Monday, March 7, 2011

Estate planning tips for the District of Columbia

If you like being near the legislative center of the United States, or have a charitable interest in the numerous non-profit associations in the area, The District of Columbia (DC) might be a good place to plan an estate in. A few items to consider when estate planning in D.C. are the D.C. estate tax code, taxes and planning techniques and tips that may be useful for the estate planner. D.C.'s estate laws are contained within Title's 18-21 and 47 of the District's codified laws. 

Several relevant aspects of the codified law may be of use when planning an estate because they may 1) inform the estate planner of the validity of an estate plan, 2) reveal estate planning options, and 3) answer and/or clarify estate planning questions. A few points with the aforementioned code are listed below:

• Next of kin qualify for $10,000 tangible property exemption.
• Estates under $40,000 in value qualify for small estate probate.
• Probate may not be necessary for estates with only 2 vehicles or less
• Valid creditors may continue to make claims after the probate process
• The estate tax exemption for D.C. is $1 million

District of Columbia (D.C.) estate planning tips

1. Since the District of Columbia does not charge an inheritance tax, cash inheritance can be transferred tax free if the estate value falls below the minimum taxable amount. Moreover, since inheritance is not subject to income tax according to Kipinger.com, an estate planner may consider it irrelevant to protect liquid accounts from estate, inheritance and income tax.

2. Generation skipping trusts are tax-exempt in D.C. This means any trust that passes estate assets to a generation other than the estate holder's and/or his or her children i.e. grandchildren, then there is no taxable estate limitation. This may be to the estate planner's advantage when trying to allocate estate assets to avoid D.C. estate tax.

3. Another way to avoid estate tax is to give away assets or reallocate assets from the estate prior to the estate administration or probate procedure. Ways to do this include gifts, college tuition savings plans, charitable trusts, and transferable retirement accounts.

4. As per Title 20, Chapter 3.57 D.C. estate code referenced above, vehicular property MAY be used to bypass probate. Moreover, if estate assets are sold, the proceeds of such sale may be used to purchase vehicles of high expense that could in theory be transferred without probate. However, transfer is dependent on the Mayor of D.C.'s concurrence.

Planning an estate can be a complex and important part of one's financial life. There are many financial vehicles and instruments that may suit the needs and requirements of an estate and the State in which the estate is planned and administrated. Since circumstances, values and conditions surrounding estates vary, so to may the documents, asset allocations and conditions of the trust, or will. 

When neither wills or trusts are used, the estate laws of the District of Columbia apply to the distribution of the estates assets. For more information on estate planning in the District of Columbia you may consult the sources below and/or a certified estate planner, licensed attorney or certified public accountant.

Cited Washington D.C. estate related sources 

1. http://government.westlaw.com/linkedslice/default.asp?SP=DCC-1000
2. http://www.finance.cch.com/pops/c50s15d170_DC.asp
3. http://otr.cfo.dc.gov/otr/site/default.asp
4. http://www.willsandtrustslawfirms.com/regional-content.cfm/state/dc/Article/13941/
5. http://articles.directorym.com/Tips_on_Estate_Planning_DC-r1140980-DC.html