what you need to know about estate planning - pt 2
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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
Wednesday, October 9, 13
Problems with POAs
• Blank Check
• No Instructions
• No Reporting Requirements
• Springing or Immediate
Wednesday, October 9, 13
Bare-Bones Trusts
• Depend on POA
• No Instructions
• Basic Planning
Wednesday, October 9, 13
• 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
Wednesday, October 9, 13
Everything in Estate Planning Comes Down to Title!
• Tax Savings• Personal Protections• Disability Protection• Remarriage Protection• Divorce Protection• Creditor Protection
Wednesday, October 9, 13
• 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)
Wednesday, October 9, 13
•Things Change
•Ability for limited change after 1st Death
Limited Power of Appointment
Wednesday, October 9, 13
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