The New Estate Planning Landscape (Guiding Clients Through Estate Planning Purgatory) Presented by   Richard L. Randall, E...
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...
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Guiding Clients 2010 Estate Tax Purgatory[1]

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Guiding Clients Through Estate Tax / Estate Planning Purgatory

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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 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
  • Guiding Clients 2010 Estate Tax Purgatory[1]

    1. 1. The New Estate Planning Landscape (Guiding Clients Through Estate Planning Purgatory) Presented by Richard L. Randall, Esq. Chairman & CEO, National Network of Estate Planning Attorneys
    2. 2. 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>
    3. 3. 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>
    4. 4. Indeed, Senate Finance Committee Chairman Max Baucus says there’s “Massive, Massive Confusion”!
    5. 5. 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>
    6. 6. 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>
    7. 7. 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>
    8. 8. 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>
    9. 9. 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>
    10. 10. 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>
    11. 11. 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>
    12. 12. 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
    13. 13. 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 Assets With Up to $3,000,000 of Appreciation - 2010 All Property (Maximum of 1st $1,300,000 Stepped Up - 2010) Family
    14. 14. 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>
    15. 15. 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
    16. 16. 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>
    17. 17. “ As If Never Enacted”
    18. 18. <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
    19. 19. <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>
    20. 20. <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>
    21. 21. 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>

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