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Gross Taxable Estate vs. Probate Estate

gross taxable estateQuestion:
What is the difference between my gross taxable estate and my probate estate?

Answer:
Your “gross taxable estate” consists of the assets which you have an interest in at death, even if the assets do not pass by virtue of your last will & testament. Your gross estate will also include gifts you made during life which exceeded the amount you could gift on an annual basis. (currently $14,000 per person per year). Your gross taxable estate may also include certain property which transferred during your life in which you retained an interest. For example, if you transferred property to your children but retained a life estate, that property would still be part of your gross taxable estate. Or, if you have property or financial interests that would become payable upon your death, such as life insurance, that may also be included in your gross estate.
Typically, the property that constitutes a person’s gross taxable estate is property held in the deceased person’s name either jointly or solely. However, it may also include ownership interests in trusts, partnerships, and jointly owned property. For example, your gross estate may include:
1. Real estate
2. Personal property (clothing, furniture, jewelry and/or collectables);
3. Financial Accounts (bank and brokerage accounts)
4. Business interests
5. Life insurance
6. Annuity contracts
7. Pension benefits
8. IRA’s
9. 401(k)s; and/or
10. All claims against others, such as claims involving a personal injury.
Your “probate estate” refers to assets which pass to your beneficiaries though a Will. This includes assets that were in the sole name of the decedent, or made payable to the estate of the decedent. The probate estate does not include assets owned jointly with rights of survivorship, payable-on-death accounts, or other assets with named beneficiaries. Assets held in a revocable or irrevocable trust do not typically pass through the probate estate.
Probate is also the name of the Surrogate’s Court process by which the Will is determined to be a final statement of how your assets are to be distributed at death and confirms the appointment of an executor chosen by you. The term “probate” also refers to the process of administering the estate. The probate process involves asset gathering, paying the debts, taxes and expenses of administration and distributing the assets to the beneficiaries named in the Will. Assets held in a trust, jointly held or with a named beneficiary will not be subject to the probate process and will pass immediately to your named beneficiaries.

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