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Presented by   Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys A New Product Line a...
Estate  Planning Overview Most Estate Plans Just Don’t Work!
Estate Planning Overview Definition of Estate Planning I Want to Control My Property While  I’m Alive and Well Plan for Me...
Estate Planning Overview <ul><li>Definition of Estate Planning </li></ul><ul><li>Then Give What  I Have </li></ul><ul><li>...
SAVE TAXES EXPAND WEALTH PRESERVEWEALTH FAMILY ME The LifeSpan™ Planning Pyramid TM & © LifeSpan, LLC 2002 - 2009.  Use by...
Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with  Counselling  </li></ul><u...
Estate Planning Overview <ul><li>Personal Planning Goals </li></ul><ul><li>Catastrophic Illness Protection </li></ul><ul><...
Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with  Counselling  </li></ul><u...
Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in Your Personal Sit...
Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in the Legal Environ...
Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in Your Attorney’s E...
Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling  </li></ul><ul...
Results of Planning Without  The Three Step Strategy ™  Approach <ul><li>Reduced Initial Planning Options </li></ul><ul><l...
Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP  Your Plan with  Counselling  </li></ul><...
Estate Planning Overview <ul><li>EVERYTHING IN ESTATE PLANNING COMES DOWN TO TITLE! </li></ul><ul><li>Tax Savings </li></u...
Presented by   Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys The New Estate Plann...
Bush Tax Act (EGTRRA) <ul><li>Gradually Increased Exemption Amounts (from $675,000 to $3.5 Million in 2009) </li></ul><ul>...
Extension of EGTRRA? <ul><li>H.R. 4154 Passed December 3, 2009 (with NO Republican Votes) </li></ul><ul><li>Republicans Wa...
Indeed, Senate Finance Committee Chairman Max Baucus says there’s “Massive, Massive Confusion”!
What Happens In 2011 If No Change? <ul><li>$1 Million Federal Estate Tax Exemption </li></ul><ul><li>Estate and Gift Tax U...
Three Potential Scenarios   <ul><li>Congress Acts This Year and Law Applies Retroactively </li></ul><ul><li>Congress Acts ...
Three Possible Results   <ul><li>2009 Provisions Extended ($3.5 Million Exemption and 45% Rate) </li></ul><ul><li>$5 Milli...
So What’s the Law Now?   <ul><li>NO Federal Estate Tax </li></ul><ul><li>NO Generation Skipping Tax (GST) </li></ul><ul><l...
And, Planning Uncertainty “Rules!”   <ul><li>Constitutionality of Retroactive Provision? </li></ul><ul><li>Interpretation ...
Constitutionality of Retroactive Application of Tax Legislation    <ul><li>Good Arguments on Each Side </li></ul><ul><li>R...
And, Planning Uncertainty “Rules!”   <ul><li>Constitutionality of Retroactive Provision? </li></ul><ul><li>Interpretation ...
Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family...
Federal  Income  Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer  all Property to Family Trust, Put...
Income Tax Basis Analysis <ul><li>BUY DIE SELL </li></ul><ul><li>2009   10  100   100 </li></ul><ul><li>2010*   10  100   ...
Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family...
And, Planning Uncertainty “Rules!”   <ul><li>Constitutionality of Retroactive Provision </li></ul><ul><li>Interpretation o...
“ As If Never Enacted”
<ul><li>“ Blended Families” </li></ul><ul><li>Charitable Bequests </li></ul><ul><li>Generation-Skipping Trusts </li></ul><...
<ul><li>What Can Financial Advisors Do? </li></ul><ul><li>Proactively Identify Clients with Estate Planning Documents Exec...
<ul><li>What Can Financial Advisors Do? </li></ul><ul><li>Proactively Identify Clients With Appreciated Assets and Assess ...
Acknowledgements <ul><li>The Author Would Like to Acknowledge the Assistance of: </li></ul><ul><li>James W. Collins, Legal...
Presented by   Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys A New Product Line a...
Estate Planning Overview <ul><li>Estate Planning Challenges </li></ul><ul><li>Mental Disability </li></ul><ul><li>Asset Tr...
Federal Estate Tax Reduction <ul><li>Key Tax Savings Provisions </li></ul><ul><li>Unlimited Marital Deduction </li></ul><u...
Estate Tax “Purgatory” Planning  <ul><li>Bush Tax Act (EGTRRA) </li></ul><ul><li>Gradually Increased Exemption Amounts (fr...
Estate Tax “Purgatory” Planning   <ul><li>Three Potential Scenarios </li></ul><ul><li>Congress Acts This Year and Law Appl...
Estate Tax “Purgatory” Planning   <ul><li>Three Most Likely Results </li></ul><ul><li>2009 Provisions Extended ($3.5 Milli...
Estate Tax “Purgatory” Planning <ul><li>Requires an “If-Then” Approach </li></ul><ul><li>IF No Estate Tax is in Effect (as...
Federal Estate Tax Reduction <ul><li>Trip to the IRS Supermarket </li></ul>
Federal Estate Tax Reduction <ul><li>Property in The Supermarket  Is  Subject to Federal Estate Tax </li></ul><ul><li>Prop...
Federal Estate Tax Reduction <ul><li>Family Trust </li></ul><ul><li>also called: </li></ul><ul><li>B Trust </li></ul><ul><...
<ul><li>Trustee Instructions: </li></ul><ul><li>Split Trusts Into Two Sub-Trusts </li></ul>Federal Estate Tax Reduction Fa...
Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family...
Federal  Income  Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer  all Property to Family Trust, Put...
Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family...
Federal Estate Tax Reduction Marital Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Income to Spouse   </li></ul>Ma...
Federal Estate Tax Reduction Marital Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Principal </li></ul><ul><ul><ul...
Limited Power of Appointment <ul><li>The “Hit Parade” </li></ul><ul><li>Kid Hits the School Bus </li></ul><ul><li>School B...
Federal Estate Tax Return Family Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Income to Spouse </li></ul><ul><ul>...
Federal Estate Tax Reduction Family Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Principal For “Needs” </li></ul>...
Federal Estate Tax Reduction <ul><li>The “Rule of 72” </li></ul><ul><li>Dividing 72 by the rate of return on your investme...
Federal Estate Tax Reduction <ul><li>Effect of Growth </li></ul>Excess To Later Beneficiaries  But Included in Survivor’s ...
Federal  Income  Tax Reduction <ul><li>Effect of Growth </li></ul>$3,000,000 To Later Beneficiaries  WITHOUT  Federal Inco...
Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family...
Estate Tax “Purgatory” Planning <ul><li>Requires an “If-Then” Approach </li></ul><ul><li>IF No Estate Tax is in Effect (as...
Federal Estate Tax Reduction <ul><li>Tax Savings Determined By: </li></ul><ul><ul><li>Applicable Exclusion Amount </li></u...
Federal  Income  Tax Reduction <ul><li>Tax Savings Determined By: </li></ul><ul><ul><li>Applicable Basis Allocation  Amoun...
Federal Estate Tax Reduction <ul><li>Available </li></ul><ul><li>Individual Name Assets </li></ul><ul><li>Living Trust Ass...
Federal  Income  Tax Reduction <ul><li>Available </li></ul><ul><li>Individual Name Assets </li></ul><ul><li>Living Trust A...
Conclusion/Recommendation <ul><li>Pursue the Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with  Counselling  ...
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A New Product Line Irs Supermarket[1]

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New Product Line IRS Supermarket

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  • MODULE 1A Use Overhead #1 - The Truth About Estate Planning Tell the CLIFF YOUNG STORY (optional) – this is used to explain the name of the workshop “The Truth About Estate Planning” and why we call it that – about preconceived notions and having an open mind QUESTION: Let me ask you a question. How many of you have found that there are really only two types of things in life: things that work, and things that don’t work? May I have your permission to be blunt?
  • MODULE 1A Use Overhead #1 - The Truth About Estate Planning Tell the CLIFF YOUNG STORY (optional) – this is used to explain the name of the workshop “The Truth About Estate Planning” and why we call it that – about preconceived notions and having an open mind QUESTION: Let me ask you a question. How many of you have found that there are really only two types of things in life: things that work, and things that don’t work? May I have your permission to be blunt?
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1A QUESTION: I have a question for you. How do you know whether an estate plan works? In fact, when do you know whether an estate plan works? Work = meets expectations. How do you know if it meets expectations. “ Snapshot” Story We’re in the business of helping families build plans that work
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1A QUESTION: I have a question for you. How do you know whether an estate plan works? In fact, when do you know whether an estate plan works? Work = meets expectations. How do you know if it meets expectations. “ Snapshot” Story We’re in the business of helping families build plans that work
  • Proper Asset Ownership (boring topic?) We don’t apologize for talking to you about it, because it’s an absolute key to the planning. QUESTION: How many of you have talked with your attorney about how your estate will be charged after you’re gone? Show of hands. Response – (If you haven’t asked the question now…You won’t be asking the questions then!) So who will be asking those questions? So how well-prepared is your family? Do your helpers know what to do? How to do it? How to pay for it? Grieving period is not a good time for education
  • MODULE 2A Overhead #3 - Counselling vs. Word Processing What passes for estate planning in America today is little more than word processing I’ll be brave enough to say over 90% of “estate” plans are 1 of 3 forms
  • MODULE 2A Overhead #3 - Counselling vs. Word Processing What passes for estate planning in America today is little more than word processing I’ll be brave enough to say over 90% of “estate” plans are 1 of 3 forms
  • MODULE 2A Overhead #3 - Counselling vs. Word Processing What passes for estate planning in America today is little more than word processing I’ll be brave enough to say over 90% of “estate” plans are 1 of 3 forms
  • MODULE 1A Use Overhead #1 - The Truth About Estate Planning Tell the CLIFF YOUNG STORY (optional) – this is used to explain the name of the workshop “The Truth About Estate Planning” and why we call it that – about preconceived notions and having an open mind QUESTION: Let me ask you a question. How many of you have found that there are really only two types of things in life: things that work, and things that don’t work? May I have your permission to be blunt?
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • MODULE 1B For people who are committed to the long term Whose fault is it? (if the plan doesn’t work)
  • Transcript of "A New Product Line Irs Supermarket[1]"

    1. 1. Presented by Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys A New Product Line at the IRS Supermarket: Shopping During Estate Tax Purgatory
    2. 2. Estate Planning Overview Most Estate Plans Just Don’t Work!
    3. 3. Estate Planning Overview Definition of Estate Planning I Want to Control My Property While I’m Alive and Well Plan for Me and My Loved Ones if I Become Disabled
    4. 4. Estate Planning Overview <ul><li>Definition of Estate Planning </li></ul><ul><li>Then Give What I Have </li></ul><ul><li>To Whom I Want </li></ul><ul><li>When I Want </li></ul><ul><li>The Way I Want </li></ul><ul><li>All While Assuring My Wisdom is Transferred Along with the Rest of My Wealth </li></ul>
    5. 5. SAVE TAXES EXPAND WEALTH PRESERVEWEALTH FAMILY ME The LifeSpan™ Planning Pyramid TM & © LifeSpan, LLC 2002 - 2009. Use by National Network members by express permission and under license granted by LifeSpan, LLC. Revised 4/2007 1. DEVELOP your plan with counselling-oriented planning partners 2. COMMIT yourself and your family to a formal continuing maintenance and education program 3. SECURE appropriate assistance to assure your wisdom is transferred along with the rest of your wealth ™ ™
    6. 6. Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling </li></ul><ul><li>Oriented Planning Partners </li></ul><ul><li>COMMIT Yourself and Your Family to a Formal Continuing Maintenance and Education Program </li></ul><ul><li>SECURE Appropriate Assistance for You </li></ul><ul><li>and Your Family to Transfer Your </li></ul><ul><li>Wisdom Along With the Rest of Your Wealth </li></ul>
    7. 7. Estate Planning Overview <ul><li>Personal Planning Goals </li></ul><ul><li>Catastrophic Illness Protection </li></ul><ul><li>Remarriage Protection </li></ul><ul><li>Creditor Protection </li></ul><ul><li>Divorce Protection </li></ul><ul><li>Values Promotion </li></ul>
    8. 8. Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling </li></ul><ul><li>Oriented Planning Partners </li></ul><ul><li>COMMIT Yourself and Your Family to a Formal Continuing Maintenance and Education Program </li></ul><ul><li>SECURE Appropriate Assistance for You </li></ul><ul><li>and Your Family to Transfer Your </li></ul><ul><li>Wisdom Along With the Rest of Your Wealth </li></ul>
    9. 9. Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in Your Personal Situation </li></ul><ul><ul><ul><li>Personal </li></ul></ul></ul><ul><ul><ul><li>Financial </li></ul></ul></ul>
    10. 10. Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in the Legal Environment </li></ul><ul><ul><ul><li>Tax </li></ul></ul></ul><ul><ul><ul><li>Non-Tax (Personal Protections) </li></ul></ul></ul>
    11. 11. Estate Planning Overview <ul><li>Three Types of Change An Estate Plan Faces </li></ul><ul><li>Changes in Your Attorney’s Experience </li></ul><ul><li>Changes in Your OWN Experience </li></ul><ul><ul><ul><li>Static vs. Continuous Improvement? </li></ul></ul></ul><ul><ul><ul><li>Add Earned and Learned Wisdom! </li></ul></ul></ul>
    12. 12. Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling </li></ul><ul><li>Oriented Planning Partners </li></ul><ul><li>COMMIT Yourself and Your Family to a Continuing Maintenance and Education Program </li></ul><ul><li>SECURE Appropriate Assistance for You </li></ul><ul><li>and Your Family to Transfer Your </li></ul><ul><li>Wisdom Along With the Rest of Your Wealth </li></ul>
    13. 13. Results of Planning Without The Three Step Strategy ™ Approach <ul><li>Reduced Initial Planning Options </li></ul><ul><li>Outdated Plans </li></ul><ul><ul><ul><li>Technical </li></ul></ul></ul><ul><ul><ul><li>Personal </li></ul></ul></ul><ul><li>Little Education </li></ul><ul><ul><ul><li>For Yourself </li></ul></ul></ul><ul><ul><ul><li>For Your Family </li></ul></ul></ul>
    14. 14. Estate Planning Overview <ul><li>Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling </li></ul><ul><li>Oriented Planning Partners </li></ul><ul><li>COMMIT Yourself and Your Family to a Continuing Maintenance and Education Program </li></ul><ul><li>SECURE Appropriate Assistance for You </li></ul><ul><li>and Your Family to Transfer Your </li></ul><ul><li>Wisdom Along With the Rest of Your Wealth </li></ul>
    15. 15. Estate Planning Overview <ul><li>EVERYTHING IN ESTATE PLANNING COMES DOWN TO TITLE! </li></ul><ul><li>Tax Savings </li></ul><ul><li>Personal Protections </li></ul><ul><ul><li>Catastrophic Illness Protection </li></ul></ul><ul><ul><li>Catastrophic Creditor Protection </li></ul></ul><ul><ul><li>Remarriage Protection </li></ul></ul><ul><ul><li>Divorce Protection </li></ul></ul>
    16. 16. Presented by Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys The New Estate Planning Landscape (Guiding Clients Through Estate Planning Purgatory)
    17. 17. Bush Tax Act (EGTRRA) <ul><li>Gradually Increased Exemption Amounts (from $675,000 to $3.5 Million in 2009) </li></ul><ul><li>Decreased Estate Tax Rates (Down to Top Rate of 45%) </li></ul><ul><li>Eliminated Estate &GST Taxes in 2010 </li></ul><ul><li>“ Sunset” Provision (“Byrd Rule”) Reinstates </li></ul><ul><li>Previous System in 2011 Unless Congress Acts </li></ul>
    18. 18. Extension of EGTRRA? <ul><li>H.R. 4154 Passed December 3, 2009 (with NO Republican Votes) </li></ul><ul><li>Republicans Wanted $5 Million Exemption and Top Rate of 35% </li></ul><ul><li>Senate Failed to Pass Any Law and Denied Two Month Extension (Same Republican Proposal, but Including “Portability” ) </li></ul><ul><li>“ Byrd Rule” Requires 60 Vote Majority & There’s No Consensus! </li></ul>
    19. 19. Indeed, Senate Finance Committee Chairman Max Baucus says there’s “Massive, Massive Confusion”!
    20. 20. What Happens In 2011 If No Change? <ul><li>$1 Million Federal Estate Tax Exemption </li></ul><ul><li>Estate and Gift Tax Unified Again </li></ul><ul><li>GST Exemption Will Be Inflation Adjusted $1 </li></ul><ul><li>Million (approximately $1,340,000) </li></ul><ul><li>Top Rates Revert to 55% (With 60% “Bump” for Estates Over $10 Million) </li></ul>
    21. 21. Three Potential Scenarios <ul><li>Congress Acts This Year and Law Applies Retroactively </li></ul><ul><li>Congress Acts and Law Does NOT apply Retroactively (or Retroactivity is held Unconstitutional) </li></ul><ul><li>Congress Does Not Act </li></ul>
    22. 22. Three Possible Results <ul><li>2009 Provisions Extended ($3.5 Million Exemption and 45% Rate) </li></ul><ul><li>$5 Million Exemption and 35% Rate </li></ul><ul><li>$1 Million Exemption and 55% Rate </li></ul>
    23. 23. So What’s the Law Now? <ul><li>NO Federal Estate Tax </li></ul><ul><li>NO Generation Skipping Tax (GST) </li></ul><ul><li>Gift Tax at 35% Rate </li></ul><ul><li>Carryover Basis Regime Becomes Effective </li></ul><ul><ul><li>$1.3 Million Step-up Allocation </li></ul></ul><ul><ul><li>Additional Step-up Allocation for $3 Million for Assets Transferred to Spouse, Either Outright or to a Q-TIP Trust </li></ul></ul>
    24. 24. And, Planning Uncertainty “Rules!” <ul><li>Constitutionality of Retroactive Provision? </li></ul><ul><li>Interpretation of Legal Documents </li></ul><ul><li>Interpretation of “Repeal” Language </li></ul>
    25. 25. Constitutionality of Retroactive Application of Tax Legislation <ul><li>Good Arguments on Each Side </li></ul><ul><li>Retroactive Application Has Been Upheld, but Rulings Can Be Distinguished </li></ul><ul><li>Very Difficult to Predict Result </li></ul>
    26. 26. And, Planning Uncertainty “Rules!” <ul><li>Constitutionality of Retroactive Provision? </li></ul><ul><li>Interpretation of Legal Documents </li></ul><ul><li>Interpretation of “Repeal” Language </li></ul>
    27. 27. Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust </li></ul>Marital Excess 1st $3,500,000 (2009) Family
    28. 28. Federal Income Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer all Property to Family Trust, Put Excess Appreciated Assets in Marital Trust </li></ul>Marital Up to $3,000,00 of Appreciated Assets All Property (1st $1,300,000 Stepped Up-20 10) Family
    29. 29. Income Tax Basis Analysis <ul><li>BUY DIE SELL </li></ul><ul><li>2009 10 100 100 </li></ul><ul><li>2010* 10 100 10 </li></ul><ul><li>2011 10 100 100 </li></ul><ul><li>*$1.3 MM Basis Adjustment; Additional $3MM Spousal Basis Adjustment </li></ul>
    30. 30. Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust </li></ul>Marital Excess 1st $1,000,000 (2011) Family
    31. 31. And, Planning Uncertainty “Rules!” <ul><li>Constitutionality of Retroactive Provision </li></ul><ul><li>Interpretation of Legal Documents </li></ul><ul><li>Interpretation of “Repeal” Language </li></ul>
    32. 32. “ As If Never Enacted”
    33. 33. <ul><li>“ Blended Families” </li></ul><ul><li>Charitable Bequests </li></ul><ul><li>Generation-Skipping Trusts </li></ul><ul><li>“ De-Coupled” State Death Taxes </li></ul><ul><li>Note : These Involve Percentages and Formula Wording </li></ul>Prioritizing Client Situations for Review
    34. 34. <ul><li>What Can Financial Advisors Do? </li></ul><ul><li>Proactively Identify Clients with Estate Planning Documents Executed Prior to 2001 </li></ul><ul><li>Proactively Verify Estate Planning Document Language For More Recent Plans </li></ul><ul><li>Proactively Identify Clients Who Have Pursued Generation-Skipping Planning </li></ul>
    35. 35. <ul><li>What Can Financial Advisors Do? </li></ul><ul><li>Proactively Identify Clients With Appreciated Assets and Assess Basis Information Situation With Them-Begin With Clients That Have Known Health Issues </li></ul><ul><li>Proactively Identify Clients Affected By Potential Reduction to $1 Million Exemption </li></ul><ul><li>Encourage Clients to Document Their Intent </li></ul>
    36. 36. Acknowledgements <ul><li>The Author Would Like to Acknowledge the Assistance of: </li></ul><ul><li>James W. Collins, Legal Support Director for the National Network of Estate Planning Attorneys </li></ul><ul><li>Members of the National Network who supplied various material and insights </li></ul><ul><li>Leading Estate Planning Attorneys for Their Insights in Articles, on Teleconferences and at the Heckerling Institute </li></ul>
    37. 37. Presented by Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys A New Product Line at the IRS Supermarket: Shopping During Estate Tax Purgatory
    38. 38. Estate Planning Overview <ul><li>Estate Planning Challenges </li></ul><ul><li>Mental Disability </li></ul><ul><li>Asset Transfer Upon Death </li></ul><ul><li>Taxation </li></ul><ul><li>Personal Planning Goals </li></ul>
    39. 39. Federal Estate Tax Reduction <ul><li>Key Tax Savings Provisions </li></ul><ul><li>Unlimited Marital Deduction </li></ul><ul><li>The “Exemption Equivalent” </li></ul>
    40. 40. Estate Tax “Purgatory” Planning <ul><li>Bush Tax Act (EGTRRA) </li></ul><ul><li>Gradually Increased Exemption Amounts (from $675,000 to $3.5 Million in 2009) </li></ul><ul><li>Decreased Estate Tax Rates (Down to Top Rate of 45%) </li></ul><ul><li>Eliminated Estate & GST Taxes in 2010 </li></ul><ul><li>“ Sunset” Provision (“Byrd Rule”) Reinstates </li></ul><ul><li>Previous System in 2011 Unless Congress Acts </li></ul>
    41. 41. Estate Tax “Purgatory” Planning <ul><li>Three Potential Scenarios </li></ul><ul><li>Congress Acts This Year and Law Applies Retroactively </li></ul><ul><li>Congress Acts and Law Does NOT apply Retroactively (or Retroactivity is held Unconstitutional) </li></ul><ul><li>Congress Does Not Act </li></ul>
    42. 42. Estate Tax “Purgatory” Planning <ul><li>Three Most Likely Results </li></ul><ul><li>2009 Provisions Extended ($3.5 Million Exemption and 45% Rate) </li></ul><ul><li>$5 Million Exemption and 35% Rate </li></ul><ul><li>$1 Million Exemption and 55% Rate </li></ul>
    43. 43. Estate Tax “Purgatory” Planning <ul><li>Requires an “If-Then” Approach </li></ul><ul><li>IF No Estate Tax is in Effect (as in 2010), Your Plan Must Provide for Maximizing Federal INCOME Tax (Capital Gains) Reduction </li></ul><ul><li>THEN Retains Traditional Estate Tax Reduction Approach IF Federal Estate Tax is Reinstated (No Later Than 2011?) </li></ul>
    44. 44. Federal Estate Tax Reduction <ul><li>Trip to the IRS Supermarket </li></ul>
    45. 45. Federal Estate Tax Reduction <ul><li>Property in The Supermarket Is Subject to Federal Estate Tax </li></ul><ul><li>Property out in The Parking Lot Is Not Subject to Federal Estate Tax </li></ul>
    46. 46. Federal Estate Tax Reduction <ul><li>Family Trust </li></ul><ul><li>also called: </li></ul><ul><li>B Trust </li></ul><ul><li>Credit Shelter Trust </li></ul><ul><li>By Pass Trust </li></ul>Family Trust
    47. 47. <ul><li>Trustee Instructions: </li></ul><ul><li>Split Trusts Into Two Sub-Trusts </li></ul>Federal Estate Tax Reduction Family Marital Survivor May Be Trustee and Beneficiary of Both!
    48. 48. Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust </li></ul>Marital Excess 1st $3,500,000 (2009) Family
    49. 49. Federal Income Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer all Property to Family Trust, Put Excess Appreciated Assets in Marital Trust </li></ul>Marital Up to $3,000,000 of Appreciation on Assets All Property (1st $1,300,000 Stepped Up-2010) Family
    50. 50. Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust </li></ul>Marital Excess 1st $1,000,000 (2011) Family
    51. 51. Federal Estate Tax Reduction Marital Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Income to Spouse </li></ul>Marital
    52. 52. Federal Estate Tax Reduction Marital Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Principal </li></ul><ul><ul><ul><li>Full Control </li></ul></ul></ul><ul><ul><ul><li>Full Use; Limited </li></ul></ul></ul><ul><ul><ul><li>Control on Death </li></ul></ul></ul><ul><ul><ul><li>Full Use </li></ul></ul></ul>Marital
    53. 53. Limited Power of Appointment <ul><li>The “Hit Parade” </li></ul><ul><li>Kid Hits the School Bus </li></ul><ul><li>School Bus Hits the Kid </li></ul><ul><li>Marriage Hits the Rocks </li></ul><ul><li>Kid Hits the Bottle </li></ul><ul><li>Kid Hits the Books </li></ul><ul><li>Kid Hits the Lottery </li></ul><ul><li>Kid Hits the Skids </li></ul>
    54. 54. Federal Estate Tax Return Family Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Income to Spouse </li></ul><ul><ul><ul><li>Mandatory </li></ul></ul></ul><ul><ul><ul><li>Discretionary </li></ul></ul></ul>Family
    55. 55. Federal Estate Tax Reduction Family Trust <ul><li>Trustee Instructions: </li></ul><ul><li>Principal For “Needs” </li></ul><ul><ul><ul><li>Health </li></ul></ul></ul><ul><ul><ul><li>Education </li></ul></ul></ul><ul><ul><ul><li>Maintenance </li></ul></ul></ul><ul><ul><ul><li>Support </li></ul></ul></ul>Family
    56. 56. Federal Estate Tax Reduction <ul><li>The “Rule of 72” </li></ul><ul><li>Dividing 72 by the rate of return on your investment roughly equals the number of years it takes to double your account balance. </li></ul>
    57. 57. Federal Estate Tax Reduction <ul><li>Effect of Growth </li></ul>Excess To Later Beneficiaries But Included in Survivor’s Estate 1st $3,500,000 (2009) $14,000,000 To Later Beneficiaries WITHOUT Federal Estate Tax Family Marital
    58. 58. Federal Income Tax Reduction <ul><li>Effect of Growth </li></ul>$3,000,000 To Later Beneficiaries WITHOUT Federal Income Tax But Could Be Later Included in Survivor’s Estate 1st $1,300,000 To Later Beneficiaries WITHOUT Federal Estate Tax or Income (Capital Gains) Tax Family Marital
    59. 59. Federal Estate Tax Reduction <ul><li>Trustee Instructions: </li></ul><ul><li>Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust </li></ul>Marital Excess 1st $1,000,000 (2011) Family
    60. 60. Estate Tax “Purgatory” Planning <ul><li>Requires an “If-Then” Approach </li></ul><ul><li>IF No Estate Tax is in Effect (as in 2010), Your Plan Must Provide for Maximizing Federal INCOME Tax (Capital Gains) Reduction </li></ul><ul><li>THEN Retains Traditional Estate Tax Reduction Approach IF Federal Estate Tax is Reinstated (No Later Than 2011?) </li></ul>
    61. 61. Federal Estate Tax Reduction <ul><li>Tax Savings Determined By: </li></ul><ul><ul><li>Applicable Exclusion Amount </li></ul></ul><ul><ul><li>(Determined by Congress) </li></ul></ul><ul><ul><li>Funding of Family Trust </li></ul></ul>
    62. 62. Federal Income Tax Reduction <ul><li>Tax Savings Determined By: </li></ul><ul><ul><li>Applicable Basis Allocation Amount (Determined by Congress) </li></ul></ul><ul><ul><li>Funding of Family Trust </li></ul></ul><ul><ul><li>Funding of Marital Trust </li></ul></ul>
    63. 63. Federal Estate Tax Reduction <ul><li>Available </li></ul><ul><li>Individual Name Assets </li></ul><ul><li>Living Trust Assets </li></ul><ul><li>Beneficiary Designations Payable to Trust </li></ul><ul><li>Not Available </li></ul><ul><li>Joint Assets </li></ul><ul><li>Beneficiary Designations Payable to Individuals </li></ul>Funding The Family Trust
    64. 64. Federal Income Tax Reduction <ul><li>Available </li></ul><ul><li>Individual Name Assets </li></ul><ul><li>Living Trust Assets </li></ul><ul><li>Beneficiary Designations Payable to Trust </li></ul><ul><li>Not Available </li></ul><ul><li>Joint Assets </li></ul><ul><li>Beneficiary Designations Payable to Individuals </li></ul>Funding The Family and Marital Trusts
    65. 65. Conclusion/Recommendation <ul><li>Pursue the Three Step Strategy ™ </li></ul><ul><li>DEVELOP Your Plan with Counselling </li></ul><ul><li>Oriented Planning Partners </li></ul><ul><li>COMMIT Yourself and Your Family to a Formal Continuing Maintenance and Education Program </li></ul><ul><li>SECURE Appropriate Assistance for You </li></ul><ul><li>and Your Family to Transfer Your </li></ul><ul><li>Wisdom Along With the Rest of Your Wealth </li></ul>
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