Estate Tax Webinar

  • 373 views
Uploaded on

Webinar

Webinar

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
373
On Slideshare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
1
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. The Estate Tax: What’s on the Horizon? Prepared for Workman Securities Corporation September 23, 2010
  • 2. How to Turn a $2.5M Estate into a $1.6M Estate….
    • DO NOTHING!
    • or
    • Get planning advice, which will cost less than 1% of penalty of non-action
  • 3. Current Status
    • At Present
      • No Federal Estate Tax
      • MN State Estate Tax (counterintuitive)
      • Basis Issues
    • 2011
      • Maximum 60% tax on estates in excess of $1M
      • MN State Estate Tax expected to remain as-is
  • 4. 2001 Economic Growth and Tax Relief Reconciliation Act
      • Reduction of rate schedule
      • Increased exemption amounts
      • Fewer taxable estates
      • 2010 – no estate tax
      • 2011 - $1 million exemption and maximum rate of 60% (55% +5%)
  • 5. What is the Problem?
      • Planning during the past ten years has assumed high exemption amounts or no estate tax
      • Therefore, nearly all planning is philosophically flawed
  • 6. Do Not Forget the State Estate Taxes
    • MN Tax calculator used to determine taxation
    • Mandatory filing if estate more than $1M
    • Decoupled from federal estate tax
    $99,600 $2,000,000 $391,600 $5,000,000 $64,400 $1,500,000 $38,800 $1,100,000 Total Due Total Gross Estate
  • 7. We Suggest…
      • Assume a $1 million exemption
      • Assume all estates will be taxed until demonstrated to be otherwise
      • Review gifting options
        • Effect of basis
        • Effect of future growth rate
        • Effect of earnings of gift property
  • 8. Where Are We Going?
    • Taxes are going up
    • There will be uncertainty in taxes
    • Registered Representatives and Financial Advisors do a lot of financial planning inadvertently by selecting beneficiaries of retirement plans that may conflict with estate plans
    • Registered Representatives and Financial Advisors will probably have a fiduciary duty
  • 9. We Suggest…
      • Registered Representatives and Financial Advisors work with lawyers to coordinate estate planning strategies
      • Move life insurance contracts to non-insured owner, beware of gifting concerns
      • Review all Buy/Sell Agreements and funding plans
        • Update valuations
      • Use gifting, insurance to fund cabin trust or cabin LLC
      • Consider potential inheritances
  • 10. Basic Estate Planning Documents
      • Will
      • Trust(s)
        • Revocable – “Living Trust”
        • Irrevocable
          • ILIT
          • Supplemental Needs Trust
      • Healthcare Directive
      • Power of Attorney
  • 11. Will
    • Provides guidance to the court
    • Nomination of fiduciaries
    • Payment of expense and taxes
    • Distribution provisions
    • No on-going management
    • Prompt closing of estate
    • Public information
  • 12. Trust
      • On-going management of assets
      • Distributions to beneficiaries, may be discretionary
      • Generally not court supervised
      • Privacy
  • 13. Health Care Directive
      • Appoints health care agent
      • Provides some direction as to wishes
        • Medical treatment
        • Donation of organs
        • Disposition of remains
  • 14. How does this affect your clients?
    • Two Examples:
    • Mr. Swenson with a $2M estate
      • Unmarried, no children
    • Mr. & Ms. Jones with a $3.5M estate
      • Two children, four grandchildren
  • 15. Scenario: Mr. Swenson
    • Possible solutions for 2011
      • Will
      • Trust(s)
        • Gifting with life insurance to an ILIT
        • Structure gifts to nieces and nephews
        • Charitable trust options
        • Gift $1M of depreciated assets – Real Estate
      • Health Care Directive (No spouse or children)
      • Power of Attorney (No spouse or children)
  • 16. Scenario: Mr. & Ms. Jones
    • Possible solutions for 2011
      • Will with exempted amount to trust
      • Gifting with life insurance to an ILIT
      • Gift $1M to remove appreciation
        • Cabin Trust
      • Charitable trust options
      • Review beneficiaries of retirement plans and insurance policies
  • 17. Costs & Process
    • Single person, no children – $400
    • Married w/children – $700-$2,400
    • Process
      • Estate planning form
      • Meet and plan
      • Draft and review
      • Execute documents
      • Re-title property or other implementation
  • 18. Questions?
  • 19. Thank You! For further information, please contact: Ben Skjold Litigation & Business Attorney Licensed in MN and IL [email_address] Paul Christensen Estate and Tax Attorney Licensed in MN and TX [email_address] [p] 612.746.2560 ■ [f] 612.746.2561 www.skjold-barthel.com