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Estate Planning 101
 

Estate Planning 101

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General presentation on why everyone needs an estate plan

General presentation on why everyone needs an estate plan

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    Estate Planning 101 Estate Planning 101 Presentation Transcript

    • ESTATE PLANNING SEMINAR Presented By: Bhavik R. Patel Sandberg Phoenix & von Gontard PC One City Centre, 15 th Floor St. Louis, MO 63101 (314) 446-4328 (Phone) (314) 727-7166 (Fax) e-mail: [email_address]
    • Basic Estate Planning Why everyone needs an estate plan
    • Reasons for an Estate Plan
      • Planning for Incapacity
      • Avoidance of Probate
      • Planning for Proper Disposition of Estate
      • Estate Tax Planning
      • Creditor Protection
    • Planning for Incapacity
      • No Planning
        • Conservatorship
        • Guardianship
      • Planning
        • Durable Powers of Attorney
          • Financial
          • Health Care
        • Revocable Trust
        • Living Will
        • Long Term Care and Disability Insurance
    • Avoidance of Probate
      • No Planning
        • Time Delay in Distribution of Assets
        • Costs and Expenses of Probate Administration
        • Public Disclosure of Estate
        • Court Involvement in Estate Decisions
      • Planning
        • Jointly Held Property
        • Beneficiary Deed
        • Transfer on Death/Pay on Death/Beneficiary Designations
        • Revocable Trust
    • Planning for Proper Disposition of Estate
      • No Planning
        • Intestacy Statutes
        • Minors
          • Receipt of Property – Conservatorships
          • Responsible for the Person - Guardianships
    • Planning for Proper Disposition of Estate-Cont.
      • Planning
        • Spousal Rights
        • Restrictions on Distributions to Spouse
        • Planning for Minor/Adult Children or Disabled Beneficiaries
          • Testamentary Trusts or Revocable Trust or Irrevocable Gift Trust
          • Family Trust
          • Separate Trusts
            • Legally may receive funds at 21
            • Delay until later ages or upon certain events
            • Incentive Trusts
            • Spendthrift Trusts
          • Missouri Transfers to Minors Law/Illinois Uniform Transfers to Minors Act - "as custodian for ...(name of minor) under the Missouri Transfers to Minors Law” or "as custodian for ...(name of minor) under the Illinois Uniform Transfers to Minors Act"
    • Planning for Proper Disposition of Estate-Cont.
      • Planning for Minor/Adult Children or Disabled Beneficiaries-Cont.
          • Special Needs Trusts
          • 529 Plans
            • Missouri Savings for Tuition Program (Pull application and info packets)
            • Illinois Bright Savings Program (Pull application and info packets)
          • Education IRAs
    • Planning for Particular Assets
      • Retirement Assets
        • Spousal Rights
        • Taxation
        • Designated Beneficiary      
      • Real Estate
        • Who will use it?
        • How will repair and maintenance costs be allocated?     
        • Should it be sold?
        • Partnerships, LLCs, Trusts      
      • Businesses  
        • Will the family need to cash out of the business?
        • Where will the funds come from?  
        • How will the business be valued?
        • Who will run/own the business?
        • Buy Sell Agreements, Stock Purchase Agreements, Key Man Insurance, Business Succession Plan, ESOPs
    • Estate Tax Planning
      • No Planning
        • Estate Tax Exemption
          • 2009         $3,500,000
          • 2010         No Tax
          • 2011 $1,000,000
        • Estate Tax Rates
          • 2009 45%
    • Estate Tax Planning
      • No Planning
        • First Spouse to Die’s Exemption Amount Wasted
      • Marital Deduction Planning
        • Utilizes Exemption of Both Spouses
    •  
    • Estate Tax Planning
      • Liquidity/Insurance Analysis
        • Estate tax is due nine months after date of death, with some exceptions for closely held business interests.
        • Insurance purchased in an Irrevocable Insurance Trust is not subject to estate tax and insurance transferred to an Irrevocable Insurance Trust by the insured will not be subject to estate tax if the insured survives three years after the transfer.
    • Estate Tax Planning
      • Gift Strategies
        • $13,000 per beneficiary, per year
        • Gift Splitting
        • $1,000,000 lifetime gift tax exemption (reduces estate tax exemption)
        • Unlimited gifts for beneficiaries directly to medical or educational institutions
      • Generation Skipping Transfer Tax Planning
    • Estate Tax Planning
      • Generation Skipping Transfer Tax Planning
        • Tax on transfers to grandchildren or beneficiaries 37 1/2 years younger than donor        
        • Tax assessed at maximum estate tax rate        
        • GST Exemption is equal to Estate Tax Exemption
        • Exemption may be leveraged
    • Future Cost Savings
      • Example 1: H & W with $200,000
        • No Estate Plan
          • Must go through probate
          • Statutory fees for personal representative and attorney = $11,825
        • With Estate Plan-Avoiding Probate
          • Flat Fee Quote of $1,500
        • SAVINGS = $10,325
    • Future Cost Savings
      • Example 2: H & W with $2M estate.
        • No Estate Plan
          • Must go through probate
          • Statutory fees for personal representative and attorney = $85,100
        • With Estate Plan-Avoiding Probate
          • Flat Fee Quote of $2,500
        • SAVINGS = $82,600
    • Future Tax Savings
      • Example: H & W with $4.0M estate (in H’s name) and H dies in 2009.
        • No Estate Plan
          • Upon 1 st spouse to die-$0 tax-unlimited marital deduction of $4.0M
          • Upon 2 nd spouse to die-$3.5M exempt due to estate tax exemption
            • Remaining $500,000 taxed at 45% = $225,000
        • With Estate Plan
          • Upon 1 st spouse to die-$0 tax-$3.5M exempt due to estate tax exemption and $500K due to marital deduction
          • Upon 2 nd Spouse to die-$500K (as a result of the unlimited marital deduction) passes to children by using part of 2 nd spouse’s estate tax exemption amount- $0 tax
        • TAX SAVINGS = $225,000