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Estate Planning


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  • 1. DE PERE AT DAWNEstate Planning 101:How to Plan for the Unthinkable Richard E. Nell Nell & Associates, S.C. April 18, 2012
  • 2. Standard Estate Plans• Wills – It’s never a bad idea to have a will – Identify Beneficiaries, how estate is divided – Specify ages of distribution, if applicable – Name an Executor/Personal Representative
  • 3. Standard Estate Plans• Durable Power of Attorney for Healthcare – Appoints an agent to make medical decisions on your behalf – Effective only after 2 physicians determine incapacity – Can be as specific or general as you wish – Need for guardianship can arise without a healthcare POA
  • 4. Standard Estate Plans• Durable Power of Attorney for Finances & Property – Appoints an agent to manage all things financial and real estate – Can be designed to be effective immediately or effective upon incapacity – Need for guardianship arises without a financial POA
  • 5. Probate• The legal process by which title to property is transferred to heirs by a court• Probate Assets: assets held in a decedent’s name alone with no beneficiary or P.O.D. designation• Non Probate Assets: assets transferred by terms of document creating non-probate status• Admitting a Will to Probate – A Will does not avoid the need for probate, but rather gives direction to the probate court – The Will must be probated to be effective – Beneficiary designations and asset titling trump Will language
  • 6. Probate• Alternative forms of Court Administration for Probate Estates less than $50,000 – Transfer by Affidavit – Summary Assignment – Summary Settlement• Costs of Probate—should it be avoided?
  • 7. Trusts in Estate Planning• Living Trusts – Assets transferred to trust during life of grantor – Irrevocable: generally can reduce estate taxes and individual income taxes (not always a good idea) – Revocable: generally do not enable grantor to avoid estate taxes or income taxes• Testamentary Trusts – Funded upon death of grantor • Common purposes are to minimize estate taxes and provide for long-term distributions
  • 8. Estate Taxes• Federal Estate Taxes – $5,120,000 estate exemption – 2013 – $1,000,000 taxed at 55% – The Gross Estate • §2031 IRC – “the value…of all property, real or personal, tangible or intangible, wherever situated.” • Includes probate and non-probated assets; §2033 IRC – the values of all property in which the decedent had an interest at the time of his or her death.• Wisconsin Estate Taxes – Wisconsin does not have an estate tax, inheritance tax or tax paid by a recipient of a gift at this time
  • 9. Estate Taxes• Taking Advantage of the Unlimited Marital Deduction – Unlimited marital deduction on property passing outright to citizen spouse or certain types of trusts – Results in $0 estate taxes due on first death, but wastes estate tax exemption of 1st spouse to pass – Estate tax exemption of 1st spouse to pass can be maximized through use of bequests which do not quality for marital deduction (outright to children; to credit shelter trust)
  • 10. Long-Term Care Issues• Medicare – Covers 100 days of long-term care in a skilled nursing facility• Medicaid – Deficit Reduction Act of 2005 brought about significant changes to divestment rules• Paying for long-term care – Medicaid – Long-term Care Insurance – Private Pay—likely the most common
  • 11. Estate Planning Wrap-Up• Proper Estate Planning will maximize bequests to family, friends, pets and charitable organizations.• Poor Estate Planning will maximize taxes to the state and federal government.