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Sun City West, AZ
Estate Planning 101
Law Office of Dennis Caufield, LLC
Insurance
Policies
“What is an “Estate?”
CashStocks
JewelryIRA’s
Investments
Your Home
Income Properties
Automobiles Antiques
Bonds&
3 Basic Keys to Estate Planning
Maintaining control during incapacity
Quick & cost effective wealth transfer at death
Protecting beneficiaries from themselves & others
When Should You Plan Your Estate?
TodayMental
IncapacityCatastrophic
Illness Death
Your Planning Opportunity
Living Trust
WillLiving Will
Powers of Attorney
2 Platforms for Planning
Will based plan
Trust based plan
Beneficiary(ies)
Will Based Plan
Properly titled assets
What is a Trust?
“a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it.”
Restatement Second of Trust §2
What is a Trust?Grantor
Trustee(s)
Beneficiary(ies)
#1 Mistake
Failing to Address Health Care Decisions
Online Storage of Healthcare Documents
Free Service Offered by the Arizona
Secretary of State
Visit www.azsos.gov/adv_dir
#2 Mistake
Failing to Plan for HIPAA
(Access to Medical Records)
#3 Mistake
No plan to control financial & property matters during incapacity
No Wealth Transfer Strategy
#4 Mistake
Intestacy
James Dean:– Died at age 24 without a will– Entire estate, including licensing fees, passed
to his father, who had abandoned him as a child.
– Licensing fees generate $1 - $3M annually.
#5 Mistake
Failure to Understand & Plan
For Death Taxes
Federal Estate Federal Estate Tax Tax
YEAR EXCL. AMT. TOP TAX RATE
2001 $675,000 55%
2002-2003 $1,000,000 49-50%
2004-2005 $1,500,000 47-48%
2006-2008 $2,000,000 45-46%
2009 $3,500,000 45%
2010 Full Repeal N/A
2011-2012 $5,000,000 35%
2013- $5,250,000 40%
#6 Mistake
Thinking Children – Minor And Adult – Don’t Need Inheritance Protection
What if your child …What if your child …
Suffers a divorceSuffers a divorceExperiences Experiences
creditor problemscreditor problemsGets suedGets sued
Inheritance Protection TrustInheritance Protection Trust
Adult child is trustee of Adult child is trustee of his trusthis trust
Has significant access Has significant access to income and principalto income and principal
Can ultimately Can ultimately consume it all -- no consume it all -- no strings attachedstrings attached
Predators, Spend-thrifts
The Woolworth Misfortune– Granddaughter of Woolworth founder, Barbara Hutton– At age 10, she inherited $25 Million in trust.– Under the terms of the Trust, Barbara received the
entire Trust ($50 million) outright with no strings attached at the age of 21.
– 46 Years and 7 husbands later, she died at age 66 with a mere $3,000.
– Years of relentless exploitation, spousal abuse, drug addiction and outrageous, uncontrolled spending.
#7 Mistake
Failing to Transfer “Values”
#8 Mistake
Not Preserving Tax Deferral Benefits of
Retirement Plans
HUGE LOSS When Your IRA is Cashed-out Early and Spent!
Assumes $100,000 at age 40 earning 6% andChild fully withdraws and must pay the tax due
A difference of over $ 400,000 on a $100,000 IRA!
Child’s Cum. Withdrawals+Balance
Age Remains Invested
Cash Out
50 $ 170,352 $ 65,000
60 $ 264,583 $ 65,000
84 $ 474,953 $ 65,000
Child’s Cum. Withdrawals+Balance
Age Remains Investestedt
Cash Out
50 $ 170,352 $ 98,361
60 $ 264,583 $ 137,062
84 $ 474,953 $ 158,983
Still a BIG LOSS When Your IRA is Cashed-out Early and Invested!
Assumes $100,000 at age 40 earning 6% andChild fully withdraws and must pay the tax due
A difference of over $ 300,000 on a $100,000 IRA!
#9 Mistake
Failing to Organize and Consolidate
#10 Mistake
In 2nd marriages, failing to protect your spouse, and your kids
#11 Mistake
Failing to Plan for Tangible Personal
Property
#12 Mistake
Failing to Name a Guardian for Minor or Incapacitated Children
#13 Mistake
Believing Estate Planning is a “One-Time
Event”
Where Do You Go From Here?Where Do You Go From Here?
“Without counsel plans go wrong, but with many advisers they succeed." Proverbs 15:22
Free Initial Consultation
Law Office of Dennis Caufield, LLCPlan Today for a Secure Tomorrow