Newspapers / The News-Journal (Raeford, N.C.) / March 21, 1985, edition 1 / Page 20
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Jointly owned properly raises questions abolit estate planning tip"'-. -Aic*" ?- ? ? Sealer V.P. (MM CMm Bank For years estate planners have (tw^dcttd jointly owned property aa a hidden trap in estate planning. ' Indeed, w? 1 1 planners could set evangelical about the evils of pro perty owned at Joint tenants with rights of survivorship between ipfrtitff Under some old law and today in larger estates, ownership of pro perty in this manner can still create adverse tax rimttqwfwtT However, due to changes in the Federal Estate Tax laws under the Economic Recovery Act of 1981 and the North Carolina In heritance tax laws in 1984, it is necessary to rethink the use of jointly owned property and its relative dangers. Under current Federal Estate Tax laws, only one-half of proper ty owned as joint tenants with rights of survivorship or tenants by the entirety between spouses is in cluded In the estate of the first to die. (It Is important to note here that this rule is far property owned between spouses only). For example, if a husband and wife own all of their property as joint tenants with rights of sur vivorship and their total combined estate it worth $400,000.00, at the death of the first spouse only $200,000.00 will be included in bis or her estate. Under current North Carolina law, effective July 1, 1984, if pro perty is owned, as joint tenants with rights of suiVivorship and a spouse dies owning property in this manner with a surviving spouse, a presumption is created that the surviving spouse paid for one-half of the jointly owned property and only one-half is taxed in the in heritance tax return of the deceas ed spouse. What this new provi sion effectively does is create a marital deduction in North Carolina for jointly owned proper ty between spouses. In the previous example, only $200,000.00 would be included in the North Carolina Inheritance tax return for the first spouse to die. These two simple illustrations are not the entire answer and deserve further analysis. Let us assume the estate of >400,000.00 jointly owned between spouses A and B and spouse A dies. Spouse B now owns all $400,000.00 by right of the Joint ownership. Also assume the assets were as follows: Mr VtfM ' Mh Houac and Lex MO, 000.00 HQUSSSJO Stocks qq CD'i 20.000.00 Farm 290,000.00 100.000 00 Spouse B will have title to all of the property but since only one half was included in the estate of Spouse A, Spouse B will not have a total stepped up basis in the pro perty. For example, the farm is worth $250,000.00 but only $123,000.00 is included in the estate of Spouse A. Therefore, Spouse B's basis in the farm is $30,000.00 (B's original 1/2 of the basis) plus the 1123,000.00 includ ed in A's estate or a total of S17S.000.00. Therefor*, If B seOs the farm for $230,000.00, he or she will have to pay a capital gains tax on r73.000.00 of tMn (S230.000.00 sales price minus SI 73.000. 00 basis). By avoiding jointly owned property and having the entire pro perty pass through the estate and one or more trusts, the basis in the farm could have increased to S230, 000.00. This could have been done without the payment of any federal estate tax also. Let's also look at what can hap pen with the estate tax. Under cur rent law, an individual can have a taxable estate of S323.000.00 in 1984, S400.000.00 in 1983. S300.000.00 in 1986 and $600,000.00 in 1987 and not pay any federal estate tax. Whenever the combined estates of the hus band and wife are not greater that the amounts reflected above, joint ly owned property will not cause any adverse federal estate tax con sequences. However, let's assume an in dividual has an estate of $400400.00 and diet in 19M own ing all his property as joint tenants with rights of survivorship with his wife. Under current law, the entire, estate would pass to the wife free of federal estate tax because it would all qualify for the unlimited marital deduction. Let's assume that the wife died in 1984also, not having remarried. The wife would have $400,000.00 included in his estate and would pay federal estate tax on $75,000.00 (The difference bet ween $400,000.00 and the $323,000.00 deduction available in 1984). The federal estate tax on $75,000.00 is $23,500. In this example, $25,500.00 would be paid in federal estate tax unnecessarily. By the use of a will and simple trust and avoidance of the jointly owned property, $25,500.00 more could have been made available to the heirs. As the estate gets larger, the use of jointly owned property with rights of sur vivorship only increases the addi tional estate tax due. People's estates are becoming larger than they realize. With the value of real estate and other pro perty increasing, husband and wives both working outside the home and the advent of newer forms and cheaper types of life in surance, an individual's estate can get into the several hundred thou- i sand dollar range very easily. In these situations jointly owned pro perty can create adverse estate and income tax consequences, As can be seen, if the combined estates of both spouses is not greater than the taxable estates for the years indicated above, no advene federal estate tax conse quences will occur. However, some lost income tax opportunities may occur. Careful planning should be done to ensure ihat the use of jointly owned pro perty is achieving the desired result and not causing unknown or hid den tax burdens. Completes 35 years Lob H. McMillan recently com pleted a milestone In her career with Burlington Industries Raeford Plant by accomplishing 35 years continuous service. Mrs. McMillan began work at the local facility as a Mender In the Cloth Room Department. Since that time she has been promoted to Head Grelge Mender Worsted Fancy , In the same department. In recogni tion of her loyal service the was proittotd a diamond ptn, 33 years certificate and gift by Plant Management. Head lice infecting Hoke school children Head lice are a problem for many Hoke County school children. Many will become infested sometime this year, a spokesman for the Hoke County Health Department said. The small blood-feeding creatures are usually less than 1/8-inch long and can live approx imately one month. During her lifetime, a female can lay about five to 10 nits or eggs daily. These nits are cemented to the hair shaft and may look like dan druff. Though dandruff can easily be removed, nits cannot, Becky Smith said. Lice are highly dependent on human body warmth. They will die within 24 hours if separated from their food supply. They have no racial or economic preference and are easily transmit ted from one person to another by sharing hats, combs, brushes, coats, towels and bedding, Mrs. Smith said. Head lice are more common among children, especially during the school year, due to close per sonal contact. Many cases have already been reported in Hoke and surrounding counties. If left untreated, infestation can spread rapidly and may reach epidemic proportions. Therefore, if one family member has Ike, all other members of the household should be examined by a health professional. The signs of lice infestation are intense itching- and scratching of the scalp, especially at the back of the neck and above the ears, Mrs. Smith said. The school nurse and public health nurses check students for head lice. If any are found, the child will be removed from school until the problem is controlled. Treatment of head lice should begin as soon as possible. The first step is to buy a special shampoo from your drug store to kill the lice and their nits. Following the shampoo treat ment, a fine-toothed comb dipped in warm vinegar should be used to comb out the lice and nits. If it is still difficult to remove some of the nhs, dip a cotton ball in warm vinegar and pull it along the hair shaft, Mrs. Smith said. All clothing, towels and bedding needs to be washed in very hot water (at least 130 ?F> and dried on the hottest setting. All non washable clothing needs to be dry cleaned. A lice-killing upholstery and carpet spray needs to be used on all upholstered furniture, carpets, rugs and mattresses. ' They should then be vacuumed thoroughly. Head lice are not the only prob lem we face in Hoke County. Scabies is another condition that can be passed from person to per son. - It is caused by a tiny mite that burrows under the skin. Eggs are laid under the skin and within 24 hours are hatched. They soon start their own burrowing so they may begin feeding. ? Scabies causes small blister-like lesions, nodules, and intense it ching. The inner wrists, armpits, abdomen, and thighs are generally the first areas affected. If left un treated, though, it can spread over the entire body, Mrs. Smith said. An affected person should see a health professional who can prescribe treatment. The entire household should be treated and all clothes and bed linens should be machine washed and dried on the hottest settings, Mrs. Smith said. For more information, contact the Hoke County Health Depart ment at 875-3717. -LEGALS CREDITOR'S NOTICE IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION 85-E-17 STATE OF NORTH CAROLINA HOKE COUNTY Having qualified as Ad ministratrix of the of Robert J. Daniels of Hoke County, North Carolina, this is to notify all per sons having claims against said estate to present them to the under signed, on or before September 10, 1985 or this notice will be pleaded in bar of their recovery. All per sons indebted to said estate will please make immediate payment to the undersigned. This the 5th day of March 1985. ? < . Evelyn T_ Daniels P.O. Box 34 Raeford, N.C. 28376 47-50C 35 Years William F. West has recently com pleted 35 years of continuous ser vice at the Burlington Industries Raeford Plant. West began his employment with Burlington In dustries at the Fayetteville Lakedale Plant as a Loom Cleaner in the Weave Department. After 26 years, and several promotions there, he transferred to the Raeford Plant as a Weaver. He has worked In the Weave Department his entire 35 years and is presently working in that area as a Loom II J'fimia aiif 1 CvwMCJWI* r Wwmfti /WB/iug n cm i presented him with a diamond pin, 25 years certificate and gift In recognition of his service. 114 N. MAIN STREET RAEFORD.NJC. STORK HOURS) ? a- HI. tH f t>0 ?.m. Mon.-tat. "WE RESERVE THE RIGHT TO UMIT QUANTITIES" PRICES GOOD THROUGH NOON MARCH 27." "OR UNTIL MERCHANDISE IS SOLD OUT" Featuring Low, Low Every Day Prices" Car Care Sanagi MOTOR OIL QUAKER STATE HD-X Wt. ***** ALL WINTER GLOVES TOBOGGANS HI- VALUE SKIN CARE LOTION Compare To Vaseline Intensive Care KL ACTIVATOR w/ALOE Regtriar and Extra Dry 10.6 ox. (LIMIT 2 PLEASE) RALLY CREAM CAR WAX WHITE RAIN HAIR SPRAY HI-VALUE COCOA BUTTER LOTION WMMtMUKI VALUABLE COUPON HI-VALUE PURE PETROLEUM JELLY Wwipiff to rflfir/M rynrojaum jwiy
The News-Journal (Raeford, N.C.)
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March 21, 1985, edition 1
20
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