Lorman Foundations Of Estate Planning 07
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Lorman Foundations Of Estate Planning 07

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  • 1. The Greatest Estate Planning Techniques Earl H. Cohen and Jeffrey C. O’Brien Mansfield Tanick & Cohen, P.A. © 2007 Mansfield Tanick & Cohen, P.A.
  • 2. What We’ll Discuss Today
    • Foundations of Estate Planning-Top Estate Planning Mistakes
    • Estate and Gift Tax Basics
    • The Top Estate and Gift Tax Planning Techniques
    • Estate Planning and Succession Planning for Business Owners
    • Top Asset Protection Tips
    • Estate Plan Implementation and Post-Mortem Planning
    • Case Study Discussion
    • And a few other ideas along the way!
  • 3. Foundations of Estate Planning Jeffrey C. O’Brien Mansfield Tanick & Cohen, P.A. © 2007 Mansfield Tanick & Cohen, P.A.
  • 4. Part One: The Importance of an Estate Plan
  • 5. Estate Plan by Default – The Intestacy Statutes
    • Uniform Probate Code (adopted in Minnesota) provides for certain “default” rules as to administration of an estate in the absence of a will.
    • Intestacy statutes ASSUME how the decedent would have wanted his/her estate distributed.
    • Determination of heirs; equal distributions
    • Spousal share
    • Intestate succession can pose problems for surviving heirs, especially with combined families and family-owned businesses
  • 6. Ten Things Estate Planning Can Do For You
    • Provide for your immediate family (guardians for minor children)
    • Provide for other relatives who need help (elderly parents, disabled relatives
    • Get your property to beneficiaries quickly (revocable trusts)
    • Plan for incapacity (powers of attorney, health care directives
    • Minimize expenses (avoid probate)
    • Choose executors/trustees for your estate
    • Ease the strain on your family (funeral planning)
    • Help a favorite cause (charitable gifts)
    • Reduce taxes on your estate
    • Make sure your business goes on smoothly
  • 7. Avoiding Probate
    • Costs money
    • Takes time
    • Public
  • 8. State and Federal Estate Taxes
    • Federal Estate Tax Applies to Estates With Value of $ 2,000,000 and more
    • Minnesota Estate Tax: 1,000,000
    • Note: valuation of estate for estate tax purposes includes life insurance proceeds
  • 9. Appointments of Guardians for Minor Children
    • Lack of an estate plan means decedent parent has no say in who serves as guardian for surviving minor children
    • Arguments ensue
    • State will appoint conservator to manage orphaned children’s assets; only lasts until age 18
    • Solution: take care of these issues in your will
  • 10. Health Care Instructions
    • Worst case scenario: Terri Schiavo
    • Setting forth in writing your desires as to health care, particularly health care in the event of terminal or critical illness, provides clarity and eliminates arguments among sides
  • 11. Business Succession Planning
    • Most family business owners want the ownership of their business to be transferred to the children who are active in the business
    • More on this later today…
  • 12. Part Two: The Basic Estate Plan
  • 13. Basic Estate Plan Documents
    • Last Will and Testament
    • Health Care Directive
    • Power of Attorney
    • Durable Power of Attorney
  • 14. Last Will and Testament – Statutory Requirements
    • Minnesota has codified the basic requirements of a will
    • Testator must be of the age of majority (18)
    • Testator must be “of sound mind and memory” – must understand what he/she is signing
    • Will must be (i) in writing; (ii) signed by Testator; and (iii) witnessed by at least two other people
  • 15. The “Simple” Will
    • Preamble
    • Article One: Payment of Expenses/Taxes
    • Article Two: Special Gifts
    • Article Three: Residue
    • Article Four: Fiduciary Selection
    • Article Five: Fiduciary Provisions
    • Article Six: General Governing Provisions
    • Article Seven: Guardians/Conservators
    • Self-Proving Affidavit
  • 16. Simple Will: Preamble
    • I, TESTATOR , of ___________ County, State of Minnesota , revoke any prior wills and codicils , and make this my will .
  • 17. Article One: Payment of Expenses/Taxes
    • Provide for payment of expenses of last illness and funeral
    • Provide for payment of debts and administration of estate
    • Provide for payment of estate taxes
  • 18. Article Two: Special Gifts
    • Provide for gifts of personal property
    • Written list permitted (524.2-513)
    • Specific gifts of cars, cash, jewelry, etc. should be specifically listed
  • 19. Article Three: Residue
    • Provides for distribution of all assets not distributed in Article Two as special gifts
    • If Testator is married with children, Testator will likely want to include trust provisions in the event spouse predeceases and children are still minors
  • 20. Article Four: Fiduciary Selection
    • Nomination of personal representative and successor(s)
    • Nomination of custodians under Uniform Transfers to Minors Act for gifts to beneficiaries under the age of 21
  • 21. Article Five: Fiduciary Provisions
    • Administrative Powers:
      • To sell property
      • To settle claims
      • To continue a business
      • To make distributions
    • Administrative Provisions:
      • Request for formal administration
      • Waiver of bond requirements
  • 22. Article Six: General Governing Provisions
    • Definitions
    • Rules of Construction
      • Governing Law
      • Written lists of tangible personal property control
    • Intentional Omissions
      • “I have intentionally limited gifts to my descendants to those provided in this will”
  • 23. Self-Proving Affidavit
    • It is recommended that the witness signatures be separately notarized (in the event a witness cannot be located)
    • An affidavit is typically attached as the last page of the will, signed by testator and two witnesses and notarized
  • 24. Health Care Directive
    • Part I: Appointment of Health Care Agent
    • Part II: Health Care Instructions:
      • General thoughts/desires on health care
      • Desires as to specific types of treatment
    • Part III: Making It Legal:
      • Signed
      • Two Options for acknowledgment – notarized or signed by two witnesses
  • 25. Statutory Short Form Power of Attorney
    • Minnesota Statutes Section 523.24
    • Statutory Form Power of Attorney allows for appointment of attorney(s)-in-fact to handle financial matters for the principal
    • Form also allows for election as to whether attorney-in-fact can transfer property and if an accounting is required
  • 26. Durable Power of Attorney
    • Durable Power of Attorney is effective from date of execution until death
    • Continues even if principal is disabled, incompetent or absent
    • Durable Power of Attorney goes beyond financial matters and also governs personal care
    • Practice tip: if executing a general durable power of attorney and a health care directive, attorney-in-fact and health care agent should be same (because agent must heed principal’s wishes in health care directive)
  • 27. The Top Ten Estate Planning Mistakes!
    • Not having a properly drawn will!
    • Relying on Joint Tenancy!
    • Leaving everything to a spouse!
    • Leaving everything to one child!
    • Failing to Plan for adequate liquidity!
  • 28. The Top Ten Estate Planning Mistakes!
    • Having insufficient life, health and long term care insurance!
    • Failure to make lifetime gifts!
    • Failure to keep life insurance out of your estate for tax purposes!
    • Failure to transfer assets to trusts!
    • Failure to make proper beneficiary designations for retirement plans!