If your estate plan includes a revocable living trust, then after your trust is in place you will need to "fund" your trust with your assets. What does it mean to "fund" a trust? It means that you will need to take a look at each and every asset you own with your estate planning attorney and determine (1) if the asset should be a part of your trust and, if so, then (2) how to get the asset into the name of your trust. Why do you need to do this? Because assets that are transferred into the name of a revocable living trust during your lifetime will avoid probate after you die, which is one of the reasons revocable living trusts have become so popular.
So what about real estate? How does real estate get into your trust? The only way to transfer ownership of real estate into the name of your revocable living trust is to have a new deed prepared and then recorded among the appropriate land records. But what if your real estate is part of a condominium or homeowner's association? Does the association need to know that your revocable living trust has become the new owner of your property? Actually, it depends - while some associations require their owners to obtain permission from the association before the new deed into the trust can be recorded, others don't really care. Thus, you will need to check with your association before recording your new deed.
With the Michael Jackson/AEG Live wrongful death lawsuit as a backdrop, the controversy surrounding the King of Pop and his family continues. Last week choreographer Wade Robson, who was a voluntary defense witness at Michael Jackson's child molestation trial in 2005 where he testified that he had never been abused by Jackson, filed a claim against MJ's estate in which he now alleges that he was in fact molested by the singer. While the court documents have been sealed for now and it is unknown at this time how much the famed choreographer is asking from the estate, MJ's estate attorneys have denounced the claim. In a statement to TMZ, estate attorney Howard Weitzman stated: "Mr. Robson's claim is outrageous and pathetic. This is a young man who has testified at least twice under oath over the past 20 years and said in numerous interviews that Michael Jackson never did anything inappropriate to him or with him. Now, nearly four years after Michael has passed, this sad and less than credible claim has been made. We are confident that the court will see this for what it is."
Meanwhile, two alleged business partners of MJ, Broderick Morris and Qadree El-Amin, have filed a lawsuit against the estate, seeking damages based on a joint venture agreement and asking for an accounting of The Michael Jackson Company. Morris and El-Amin claim to have helped MJ stage his comeback after the 2005 child molestation trial and are each seeking 1.6% of profits earned by the estate.
And then there is the teenage angst of Paris Katherine Michael Jackson, MJ's only daughter, who is now 15. Apparently Ms. Jackson is tired of being raised by her now 84-year-old grandmother, Katherine, who is a tad bit old fashioned. Instead, rumors have been circulating that Ms. Jackson wants to move in with her biological mother, 54-year-old Debbie Rowe. Rowe was married to MJ for three years and is also the biological mother of MJ's oldest son, Michael Joseph "Prince" Jackson, Jr.
So, unfortunately, it appears that MJ will not be resting in peace any time soon.
Will another state death tax disappear retroactively in 2013? Quite possibly. Last Wednesday the North Carolina House of Representatives voted 82 - 37 in favor of repealing the state estate tax retroactively to January 1, 2013. The bill has now been referred to the North Carolina Senate where it will be reviewed by the Finance Committee. This comes on the heels of Indiana's retroactive repeal of its state inheritance tax: It's Official - Indiana's Inheritance Tax Has Been Repealed, Retroactively.
If North Carolina's estate tax is repealed, then this will only leave 16 U.S. jurisdictions that collect a state estate tax in 2013 and 6 U.S. jurisdictions that collect a state inheritance tax in 2013, with Maryland and New Jersey being the perennial favorites that end up on both lists by collecting a state estate tax and a state inheritance tax. Tennessee's death tax is already set to disappear, but not until January 1, 2016.
OK, here I go again, writing about a topic that irks me every time I read an article or a study which concludes that people don't move to reduce their tax bill. As an estate planning attorney who practiced in Maryland from 1995 to 2004 (by the way, Maryland has a state income tax, estate tax, and inheritance tax) and moved to Florida in 2004 (by the way, Florida has none of those state taxes), I am here to tell you that people do move to avoid state income taxes and death taxes. At least once a week (sometimes more), me or another attorney from my firm works with a client who has made the decision to give up their Connecticut, Illinois, Maryland, New Jersey, New York, etc. (fill in the name of the state that has an income tax and/or a death tax) residency to become a Florida resident. Why? Taxes, that's why.
Don't believe me? Then read this opinion piece from The Baltimore Sun titled "Farewell, my Maryland, farewell to taxes, farewell to extreme liberalism," which I have reproduced here:
"It is with a heavy heart that after living here for 40 years, my husband and I must bid Maryland farewell. We can no longer afford to support fiscal and social programs with which we do not agree.
We moved here in 1973, bought a home we could afford, sent our children to Maryland public schools, worked for Maryland companies, paid our share of property and income taxes, and lived within our means. And now that we have retired, the state of Maryland feels it is entitled to increase the tax burden on our hard-earned retirement income.
After researching the issue, we found that Florida has no state income tax and no state estate tax. We recently purchased a home in Florida, and in May we will establish Florida residency.
We are not alone. Florida real estate brokers told us that the exodus from Maryland is astonishing. The last legislative session that increased taxes, went soft on illegal immigration and hardened criminals, and stepped on the Constitution's Second Amendment was the catalyst we needed to move.
That Gov. Martin O'Malley thought it was his most productive session ever was ample proof that we do not align with his vision for our once beloved state.
The real tragedy of our departure is not only the income the state will lose because we are no longer obliged to pay state income tax, but Maryland also loses the hundreds of volunteer hours I devote to my church, Towson University and Mercy Hospital. Florida will now be the beneficiary of my money and my free labor.
So good-bye, Maryland, I will miss you. But if your policies ever change from being the mismanaged "Freeloader State" back to the well-managed "Free State" I may return.
Constance Kihm, Parkton"
Welcome to Florida, Mrs. Kihm.