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Estate Planning

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What to concider when creating your plan

What to concider when creating your plan


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  • Welcome. My name is _______, and I have been asked to talk to you today about Estate Planning and the things that should be considered when creating your plan. Now let me take a minute and tell you a little about the company that I work for, and who will be providing services to your employer’s retirement plan. We are the Principal Financial Group ® , and we are a leader in retirement plan services. 125 years in the financial services business, offering businesses, individuals and institutional clients a wide ranges of financial products and services Total assets under management is over $236.6 billion Fortune 500 Company Over 15,200 employees worldwide 18.8 million customers
  • Whether you’re just starting out or getting ready to retire, it’s never too early to start thinking about estate planning. At the Principal Financial Group ® , we believe that a solid estate plan is part of good retirement planning. Even though it may be unpleasant to think about death, estate planning ensures that you choose your heirs - not Uncle Sam or your state government. You also gain a sense of comfort knowing that your last wishes will be carried out according to your intentions.
  • A good estate plan allows you to choose who gets what property you own, when they receive it, and how they will receive it – all in a way that allows substantial tax savings and requires little use of the legal system. Of course, your personal estate plan should provide for personal and financial guardians for your minor children (if any) as well as yourself if you become physically or mentally unable to communicate your wishes.
  • To create a well-rounded estate plan, there are eight things to know to create a plan for your wishes: Create a will Create a durable power of attorney Name a Health Advocate Set up trusts for beneficiaries when advisable Name the right person as beneficiary on a life insurance policy Disburse assets while you’re still here Review and update your estate plan regularly Inform heirs where to find documents
  • The first key to successful estate planning is to create a will . If you die without a will, it can create costly and stressful problems for your heirs. Without a will, the state uses a formula to assess who is an heir and what share of your property the heir will receive. The formula may be very different than what you wanted. Consult an attorney who can assist you with ensuring that your assets are divided properly among your heirs, and remember to keep your will current.
  • Create a durable power of attorney (POA). If you become incapacitated, a power of attorney names a person who will pay your taxes and bills, make investment decisions. Choose someone you know well and with whom you trust with your finances. In a POA, the person that is granted the authority to pay bills, etc is known as an Attorney in Fact (AIF). The person for whom the POA is created is known as the principal and typically the authority to grant to the AIF ends upon death of the principal.
  • Name a health advocate. A durable power of attorney for health care empowers someone of your choice to make certain health-care related decisions for you if you’re unable. This popular document can include a provision that life-sustaining measures not be used in case of terminal illness in order that your wishes can be clearly stated.
  • Set up trusts for beneficiaries when advisable. A trust allows you to stipulate how an heir can receive an inheritance and at what age they receive the money. A trustee can even be appointed to make those decisions for you after you die, guided by your written wishes.
  • Name the right person as beneficiary on a life insurance policy. If you are the beneficiary of a policy, the proceeds are counted in your estate. If you put someone else’s name as beneficiary, it’s excluded from your estate. Your children can, for example, own a policy that names them beneficiaries when you die, completely circumventing estate taxes.
  • Disburse assets while you’re still here. Pass on more to your heirs while you are living. You can give up to $13,000 to as many people as you wish, without either parties paying a tax. Couples can give $13,000 each, or a total of $26,000 for both.
  • Review and update your estate plan regularly. Don’t just forget it! Make periodic adjustments to reflect changes in your life such as divorce, remarriage, new grandchildren and changes in health or financial circumstances.
  • Inform heirs where to find documents. Organize all your estate planning information in a safe deposit box. You can find these at banks and credit unions, for example. Give your executor or heir authorization to open the box and the location of the key. Once a lockbox renter/owner dies, the lock box can’t be opened without being audited.
  • Many of us today mistakenly think that inheritance taxes were abolished with the 2001 Tax Act, but in actuality it doesn’t take effect until 2010. In the meantime, the exemption amount gradually rises from $675,000 in 2001 to $3.5 million in 2009. (In 2002 and 2003, the exemption was $1 million.) Estates over that can be taxed at a steep federal rate of 45 to 50 percent. In 2010, all is not free – heirs who sell an appreciating inherited asset will have to pay capital gains on the profit. Before, inherited assets were valued at their market price on the date of death, not the price originally paid. So, your bottom line is that if your estate is over $2 million (married $4 million), your estate faces taxation issues. It also applies if your net worth reaches that amount by 2010, if it occurs before your death. Individuals who have done pre-2001 estate planning, you may want to update your plan.
  • Although some individuals without spouses with minimal assets and no dependents may be able to start a suitable estate plan, individuals with children or dependents, substantial assets, and complex finances are probably better off hiring an attorney who specializes in estate planning. An attorney schooled in estate planning can help navigate federal inheritance tax exemption guidelines as well as your local state inheritance and estate tax laws. To find an attorney who specializes in estate planning, wills and probate, the National Association of Financial & Estate Planning can help. Log on to nafep.com or, ask your financial professional, accountant, friends or relatives for recommendations in your area.
  • Want More Information? Today’s meeting has hopefully provided you with things to consider as you and your loved ones think about estate planning. The key concepts introduced today should give you a basic understanding of what goes into creating a solid estate plan. Hopefully the information today will get you thinking more in-depth about something many Americans today tend to avoid. For more help with retirement planning or to calculate your estate’s future net worth, log on to principal.com. Once you are ready to create your plan, we do recommend you consult a qualified attorney who specializes in estate planning and can help create a plan to carry out your specific wishes. With a little planning, you can relax knowing your last wishes will be carried out. Don’t delay. Start a plan today!
  • Transcript

    • 1. What to Consider When Creating Your Plan Estate Planning:
    • 2. Solid Estate Planning
      • It’s never too early to start thinking about an estate plan
      • You determine what happens to your assets
      • Provides a sense of comfort that your last wishes will be carried out
    • 3. Benefits of an Estate Plan
      • Allows you to choose
        • Who gets what property you own
        • When they will receive it
        • How they will receive it
    • 4. Creating a Well-Rounded Estate Plan 8 keys to creating the best plan for your wishes
    • 5. #1: Create a Will
      • A will can help you
        • Determine the division of assets between your heirs the way you wish they be divided
        • Avoid the state’s involvement in the division of assets
      Steps to Create an Estate Plan
    • 6. #2: Create a Durable Power of Attorney
      • Choose someone you know well and with whom you trust your finances
      Steps to Create an Estate Plan
    • 7. #3: Name a Health Advocate
      • Provision included in your Durable Power of Attorney for health care purposes
        • States that life-sustaining measures may not be used in case of terminal illness
        • Clearly states your wishes
      Steps to Create an Estate Plan
    • 8. #4: Set up Trusts for Beneficiaries
      • Allows you to:
        • Stipulate how an heir can receive an inheritance
        • Appoint a trustee to make decisions in accordance with your wishes
      Steps to Create an Estate Plan
    • 9. # 5: Name the Right Person as Beneficiary
      • If you are the beneficiary of a life insurance policy, you may want to consider putting someone else’s name as beneficiary
      • This excludes the policy from your estate
      Steps to Create an Estate Plan
    • 10. #6: Disburse Assets While You’re Still Here
      • Pass on more to heirs while you’re still living
        • You can give up to $13,000 to as may people as you wish
        • Neither party pays taxes
        • Couples can give $13,000 each
      Steps to Create an Estate Plan
    • 11. #7: Regularly Review & Update Your Estate Plan
      • Make periodic adjustments to reflect life changes
      Steps to Create an Estate Plan
    • 12. #8: Inform Heirs Where to Find Documents
      • Get a safe deposit box at your bank or credit union
      • Give authorization to your executor or heir
      • Make sure they know the location of the key
      Steps to Create an Estate Plan
    • 13. The Bottom Line
      • Estate tax guidelines and exemptions
        • Exemption amount gradually rises
            • $675,000 in 2001 to $3.5 million in 2009
        • Estates over $2 million taxed at 45% to 50%
        • Heirs in 2010 who sell an appreciating inherited asset will pay capital gains on the profit
      • It is recommended that you update your plan if you have done pre-2001 estate planning.
    • 14. Navigating the Legalities
      • It may be more beneficial to you to hire an attorney who specializes in Estate Planning
      • Finding an attorney
        • Contact the National Association of Financial & Estate Planning
        • nafep.com
        • Ask around for recommendations
          • Financial professionals
          • Accountants
          • Friends or relative
    • 15. Want More Information?
      • Visit principal.com
        • Help with retirement planning
        • To calculate your estate’s future net worth
      • Consult a qualified attorney
    • 16. Disclosures
      • ©2009 Principal Financial Services, Inc. Des Moines, Iowa 50392-0001
      • No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system without prior written permission from the Principal Financial Group ® .
      • While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements.
      • Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, member SIPC. Princor and Principal Life are members of the Principal Financial Group ® (The Principal ® ), Des Moines, IA 50392.
      PD 529-1 | #4337052011 | 06/2009

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