What You Need to Know About Estate Planning - Pt 2

What You Need to Know About

Estate Planning™

Jim EagarAttorney & Counsellor at Law

Part 2

Wednesday, October 9, 13

Quick Review 3 Step

ProcessWednesday, October 9, 13

People Are Different

#1 - Base Your Plan on

Counseling, not Word Processing

Wednesday, October 9, 13

Things Change

#2 - Be Part of a Formal Update &

Education Program

Wednesday, October 9, 13

We’re All Going to Die

#3 - Plan for a Controlled

Transfer Process

Wednesday, October 9, 13

Estate Planning Problems to Solve

1. Mental Disability Planning2. Transfer Assets at Death3. Avoid Estate Taxes4. Personal Planning Goals

Wednesday, October 9, 13

Estate Planning Options

• No Documents (Joint Tenancy)• Simple Will & Power of Attorney• Basic Living Trust & POA• Family Lifetime Planning Process™

Wednesday, October 9, 13

1. Disability Protection

Wednesday, October 9, 13

No Planning = “Living Probate”

• Loss of Control to Judge

• When I’m disabled

• Who will control

• What they can do

• High Cost of Conservatorship

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Problems with POAs

• Blank Check

• No Instructions

• No Reporting Requirements

• Springing or Immediate

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Bare-Bones Trusts

• Depend on POA

• No Instructions

• Basic Planning

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• How/Who Makes the Decision

• Private Transfer to Who You Select

• Personalized Instructions for Your Care

• Personalized Design Session

Family Lifetime Planning Process™

Wednesday, October 9, 13

2. How Assets Transfer

• Contract

• Operation of Law

• Probate

• Living Trust

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Everything in Estate Planning Comes Down to Title!

• Tax Savings• Personal Protections• Disability Protection• Remarriage Protection• Divorce Protection• Creditor Protection

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• Two Things to Know:

• Unlimited Marital Deduction “Bill Gates”

• The “Coupon” Federal & State Exemptions

3. Estate Tax Reduction

Wednesday, October 9, 13

A Trip to the IRS Supermarket

Husband Wife

Wednesday, October 9, 13

• Property in the supermarket is subject to Estate Tax

• Property out in the parking lot is NOT subject to Estate Tax

• Goal: Get Property out in the parking lot!

Estate Tax Reduction

Wednesday, October 9, 13

• Coupon Amount

• Credit Shelter Trust

• B Trust

• Bypass Trust

The Family Trust

FamilyTrust

Wednesday, October 9, 13

• Split Decedent’s Estate into Two Trusts

• Transfer up to Coupon amount in Family Trust, put excess in Marital Trust

Trustee Instructions

MaritalTrust

(Tax Deferred)

FamilyTrust

(Tax Free)

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•Things Change

•Ability for limited change after 1st Death

Limited Power of Appointment

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Tax Savings Determined By:

• The Amount of the Coupon (Applicable Exclusion Amount)

• The Funding of the Family Trust

FamilyTrust

Wednesday, October 9, 13

MaritalTrust

FamilyTrust

RLT

Husband Wife

JointInsurance401(k)IRA

Wednesday, October 9, 13

MaritalTrust

FamilyTrust

Will

Husband Wife

JointInsurance401(k)IRA

Wednesday, October 9, 13

Personal Instructions for Clients

• Easier to Edit than Create

• Design Process: Education/Choices

• Checklists for:

• Health Care Decision-Making

• Final Arrangements

• Guardian Instructions

Wednesday, October 9, 13

Personal Instructions for Beneficiaries

•Protection Against Life Risks

•Transfer of Values:

•Personal Guidance & Instructions

•Family Legacy

Wednesday, October 9, 13

Life Risks for Beneficiaries

•Lack of Financial Discipline

•Lack of Financial Experience

•Failed Marriage

•Remarriage of Surviving Spouse

•Catastrophic Creditors

Wednesday, October 9, 13

Inheritance Reception

A formal process designed to assure you and your loved ones that your true wealth is realized, efficiently transferred and effectively received

Wednesday, October 9, 13

Access & ControlYou Want Your Benficiaries to :

• Access inheritance

• Control inheritance

Wednesday, October 9, 13

Trust Protection MindsetAt What Age is it OK for:

• Ex-Spouse to get 50% of inheritance?

• Creditor to get all of the inheritance?

Wednesday, October 9, 13

Trust Design

•Access and Control by Beneficiary

•Protections from Divorce & Creditors

•Watching Both Ways When Crossing the Street

•Balancing Access and Control

Wednesday, October 9, 13

Trust Design

•Access and Control by Beneficiary

• Protections from Divorce & Creditors

•Customized Instructions to Fit Beneficiary

Leaving Inheritance Inside of Protective Trust Provides:

Wednesday, October 9, 13

• Appropriate Trust Design Balances Access & Control with Personal Protections

• After Education, Most Choose a Protective Trust (“school bus trust”) even for Adult Beneficiaries

Wednesday, October 9, 13

•People are Different

•Things Change

•We’re all Going to Die

Why Plans Don’t Work

Wednesday, October 9, 13

Need A Process!

Wednesday, October 9, 13

Three-StepProcess

#1 Counseling, not Word Processing

Wednesday, October 9, 13

Three-StepProcess

#2 Formal Update &

Education Program

Wednesday, October 9, 13

Three-StepProcess

#3Plan for a Controlled

Transfer Process

Wednesday, October 9, 13

3 Levels of Service

• Basics Plan

• Foundational Plan

• Family Protective Plan™

Wednesday, October 9, 13

The Next Step

• Meeting• (541) 244-2157

Wednesday, October 9, 13