Estate planning presentation

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A presentation explaining the importance of preparing an estate plan sooner rather than later. A brief explanation of the component parts of an estate plan is included.

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Estate planning presentation

  1. 1. LIFE CHANGES& ESTATE PLANNING MARRIAGE BIRTH OR ADOPTION OF CHILD(REN) DIVORCE DEATH OF CHILD OR SPOUSE OPENING NEW BUSINESS CHANGES IN YOUR FINANCIAL PROPERTY
  2. 2. ASSUMPTIONS WILL LIVE FOREVER WILL NEVER BE DISABLED WILL NEVER REQUIRE LONG TERM CARE WILL NEVER NEED ANOTHER PERSON TO MAKE MEDICAL DECISIONS FOR YOU ESTATE TAX LAWS WON’T APPLY TO YOU ESTATE PLANNING IS EASY, ANY ONE CAN DO IT, AT ANY TIME NO NEED TO THINK ABOUT PLANNING TODAY AS THERE WILL ALWAYS BE TOMORROW.
  3. 3. KEY ASSUMPTIONS WILL LIVE FOREVER WILL NEVER BE DISABLED WILL NEVER REQUIRE LONG TERM CARE WILL NEVER NEED ANOTHER PERSON TO MAKE MEDICAL DECISIONS FOR YOU
  4. 4. KEY ASSUMPTIONS ESTATE TAX LAWS WON’T APPLY TO YOU ESTATE PLANNING IS EASY, ANY ONE CAN DO IT, AT ANY TIME NO NEED TO THINK ABOUT PLANNING TODAY AS THERE WILL ALWAYS BE TOMORROW.
  5. 5. EXCUSES ONLY THE WEALTHY HAVE ESTATES MY SPOUSE WILL INHERIT ALL MY PROPERY TAX FREE I DON’T NEED TO DO ANY PLANNING ESTATE IS DEFINED BY BLACK’S LAW DICTIONARY AS AN INTEREST IN LAND OR OTHER PROPERTY
  6. 6. UNLIMITED MARITAL DEDUCTION Allows one spouse to pass an unlimited amount of assets tax-deferred to the other spouse in life or at death (unless one spouse is not a U.S. citizen). Where non US spouse, transfer is taxable unless made through a Qualified Domestic Trust (QDOT).
  7. 7. 10 QUESTIONS TO ASK YOURSELF ARE YOU EXPECTING TO LIVE LONGER DO YOU HAVE CHILDREN, ARE THEY FROM MORE THAN ONE RELATIONSHIP HAVE YOU BEEN MARRIED MORE THAN 1X WHAT ARE YOUR HOPES AND DREAMS WHAT HAVE YOU DONE TO ASSUE ACHIEVING YOUR HOPES & DREAMS?
  8. 8. 10 QUESTIONS TO ASK YOURSELF ARE YOU PREPARED FOR A CATASTROPHIC EVENT? ARE YOUR ASSETS PROTECTED IN THE EVENT OF LONG TERM CARE? DO YOU WANT YOUR ESTATE TO INCUR THE COSTS, DELAYS, EXPENSE AND PUBLIC NATURE OF A PROBATE PROCESS? WHAT HAVE YOU DONE TO MINIMIZE STATE OR FEDERAL ESTATE TAXES? IF YOU HAVE DONE NOTHING HOW WILL YOU PROTECT YOUR FAMILY AND ASSETS?
  9. 9. ESTATE PLANNING PRIMARY FUNCTION OF AN ESTATE PLAN – PEACE OF MIND – MAINTAIN CONTROL – PROTECT ASSETS FOR YOURSELF & LOVED ONES  ESTATE TAXES  CREDITORS  SPECIAL NEEDS – AVOID PROBATE
  10. 10. ESTATE PLAN IS LIKE A PUZZLE LEGAL DOCUMENTS LONG TERM CARE INSURANCE LIFE INSURANCE DISABILITY INSURANCE RETIREMENT FUNDS REVERSE MORTGAGE PUBLIC BENEFITS
  11. 11. ESTATE PLANNING WHAT CONSTITUTES A GOOD ESTATE PLAN – WELL THOUGHT OUT – COMPREHENSIVE – ACHIEVES YOUR GOALS AND OBJECTIVES DURING YOUR LIFETIME AND BEYOND
  12. 12. ESTATE PLANNING WHAT CONSTITUTES A BAD ESTATE PLAN – NOT THOUGHT OUT; – NOT PREPARED FOR THE UNTHINKABLE; – DOES NOT PRESERVE FAMILY HARMONY; – DOES NOT PRESERVE ASSETS; – NO PLAN.
  13. 13. ESTATE PLANNNINGCONSEQUENCES OF POOR OR NO PLANNING MAY NEED A GUARDIANSHIP MEDICAL WISHES MAY NOT BE CARRIED OUT STATE LAW VIA A PUBLIC PROBATE PROCESS DECIDES WHO RECIEVES YOUR ASSETS AND IN WHAT PROPORTIONS; COURT DECIDES WHO RAISES YOUR MINOR CHILDREN; HEIRS MAY UNNECESSARILY INCUR ESTATE TAXES.
  14. 14. SOME EXAMPLES OF LEGAL DOCUMENTS WILL TRUST DURABLE POWER OF ATTORNEY LIVING WILL & HEALTH CARE PROXY DECLARATION OF HOMESTEAD BUSINESS SUCCESSION PLAN PRENUPTIAL AGREEMENT CARE TAKER AGREEMENT
  15. 15. WILL A document that controls the flow of your personal property such as jewelry, family heirlooms, and assets held in your name only. It does not control what passes by beneficiary designation (for example, life insurance, IRAs, retirement plans, Transfer on Death agreements), by contract (for example, accounts held by joint tenancy with rights of survivorship), or by trust.
  16. 16. PERSONS APPOINTED Executor The person who administers your final estate. That person should be sensitive to the needs of your beneficiaries, competent to handle financial and legal matters, and available and willing to take on responsibilities. Guardian The persons who will take care of your dependents. They should know your children already (if possible), have similar philosophic views to your own, and be financially able to take on the responsibility of caring for your children.
  17. 17. WILL - REQUIREMENTS 18 Years of Age or Older Sound Mind No Undue Influence Typed Declaration Sign and date 2 Impartial Witnesses.
  18. 18. GROUNDS FOR WILL CONTEST LACK OF TESTAMENTARY CAPACITY. UNDUE INFLUENCE FRAUD IMPROPER EXECUTION
  19. 19. TRUSTS A separate entity that holds property for the benefit of either the grantor (creator) of the trust or his or her heirs. A trustee manages the assets that are placed in the trust and makes sure that the terms of the trust are followed.
  20. 20. LIVING TRUST A trust thats established while you are alive. You can declare yourself the trustee of the trust until you are no longer able to act on your own behalf. You can set standards for determining capacity--for example, your doctor and your spouse must agree that you are unable to make significant decisions on your own. Assets must be re-titled in the name of your living trust. At your death, any assets in the living trust do not have to go through probate.
  21. 21. TESTAMENTARY Just the opposite of a "living trust." This trust isnt established until after you die. Your will typically includes the language to establish these trusts at your death. This type of trust must be probated.
  22. 22. SHOULD EVERYONE HAVE A LIVING TRUST? Absolutely NOT! A living Trust is appropriate for persons who have concerns about – the Estate Tax, – Providing for offspring from a previous relationship, and – Probate Avoidance.
  23. 23. IRREVOCABLE LIFE INSURANCE TRUST Removes the value of your life insurance from your taxable estate. You irrevocably assign your policies to the trust. This means you cant change your beneficiaries at a later date. You choose a trustee to make sure the policy premiums are paid. If you transfer life insurance policies to an irrevocable trust, you must live three years past the date of transfer or the value of the policies will be pulled back into your estate.
  24. 24. MEDICAID QUALIFYING TRUST A type of trust for a person who may require long term care and seeks to have asset protected in order for Medicaid to pay for such care. Trust must be irrevocable. Should be income only “Trigger Trust” no longer valid.
  25. 25. ALTERNATIVES Buy Long Term Care Insurance; Convert Countable Assets into Non Countable Assets Take advantage, if possible, of transfers that can be made without satisfying a look back – Resource Allowance for Community Spouse – Son/daughter care taker rule Create a Special Needs Trust
  26. 26. MEDICAID RULES Countable Assets – Cash over $2,000 or $3,000 – Securities – Retirement Accounts – Time deposits – CD’s – Investment property & Vacation Homes – Whole Life Insurance – 2nd Motor Vehicle – Every other asset not listed as non countable
  27. 27. MEDICAID RULES Non Countable Assets a/k/a Exempt – House used a primary residence; – Cash under $2,000 or $3,000; – One Car; – Personal Jewelry; – Household effects; – Pre paid Funeral Plan; – Burial Account no more than $2,500 – Cash paid for legal fees to accomplish Medicaid planning;
  28. 28. MEDICAID RULES Look back (pre 2004) – Transfers individuals must satisfy 3 year look back; – Transfers into trust must satisfy 5 year look back; – Trust must be irrevocable. If it is an income only trust the income must continue when the beneficiary requires long term care; – Where look back not satisfied for plans created prior to 2004, “half a loaf” available; – Half a Loaf would allow for Medicaid to calculate a penalty period during which the applicant would be self-pay.
  29. 29. REVISING AN ESTATE PLAN MARRIAGE CHILD BIRTH/ADOPTION DIVORCE DEATH OF BENEFICIARY CHANGE IN PROPERTY CHANGE IN CIRCUMSTANCES

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