Advanced Estate Planning for Advisors Presents:

Legend TRUST Passes Non-Taxable Passes Taxable Passes with a Discounted Value Creditor Protected Trust Creditor Protected LLC Charity

The Revocable Living Trust More Than a Piece of Paper!!!

Issues Revocable Living Trusts Can (But Usually Don’t) Address Avoid Probate Provide for Incapacity Protect Minor Children Minimize Estate Taxes Provide Asset Protection for Surviving Spouse Ensure Plan is Carried Out Protect Children from Blowing Inheritance Protect Children from Creditors and Lawsuits Protect Children from Divorce Prevent Children from Fighting Dynasty Trust Planning Eliminate All Estate Taxes via a TCLAT

Avoid Probate

Provide for Incapacity

Protect Minor Children

Minimize Estate Taxes

Provide Asset Protection for Surviving Spouse

Ensure Plan is Carried Out

Protect Children from Blowing Inheritance

Protect Children from Creditors and Lawsuits

Protect Children from Divorce

Prevent Children from Fighting

Dynasty Trust Planning

Eliminate All Estate Taxes via a TCLAT

Basic Estate Plan Revocable Living Trust Pour Over Will Durable Power of Attorney Certificate of Trust Assignment of Personal Property Advanced Health Care Directive HIPPA Authorization Guardianship Nomination Personal Property Memorandum

Revocable Living Trust

Pour Over Will

Durable Power of Attorney

Certificate of Trust

Assignment of Personal Property

Advanced Health Care Directive

HIPPA Authorization

Guardianship Nomination

Personal Property Memorandum

Simple Revocable Living Trust Foundation of any Estate Plan Primary Purpose is Usually to Avoid Probate Grantor, Trustee, Beneficiary Funding

Foundation of any Estate Plan

Primary Purpose is Usually to Avoid Probate

Grantor, Trustee, Beneficiary

Funding

Simple Revocable Living Trust Pros Avoid Probate Cons Provide for Incapacity Protect Minor Children Minimize Estate Taxes Provide Asset Protection for Surviving Spouse Ensure Plan is Carried Out Protect Children from Blowing Inheritance Protect Children from Creditors and Lawsuits Protect Children from Divorce Prevent Children from Fighting Dynasty Trust Planning Eliminate All Estate Taxes via a TCLAT

Pros

Avoid Probate

Cons

Provide for Incapacity

Protect Minor Children

Minimize Estate Taxes

Provide Asset Protection for Surviving Spouse

Ensure Plan is Carried Out

Protect Children from Blowing Inheritance

Protect Children from Creditors and Lawsuits

Protect Children from Divorce

Prevent Children from Fighting

Dynasty Trust Planning

Eliminate All Estate Taxes via a TCLAT

Avoid Probate Trust must be funded to avoid probate

Trust must be funded to avoid probate

ADVISOR ALERT Wouldn’t offering to check your client’s financial statements to make sure they are in the name of the trust be a good way to make sure you know what all their investable assets are?

Wouldn’t offering to check your client’s financial statements to make sure they are in the name of the trust be a good way to make sure you know what all their investable assets are?

RLT Pour Over Will SURVIVING SPOUSE KIDS Durable Power of Attorney Health Care Directive HIPPA

Sophisticated Revocable Living Trust Pros Avoid Probate Provide for Incapacity Protect Minor Children Minimize Estate Taxes Provide Asset Protection for Surviving Spouse Cons Ensure Plan is Carried Out Protect Children from Blowing Inheritance Protect Children from Creditors and Lawsuits Protect Children from Divorce Prevent Children from Fighting Dynasty Trust Planning Eliminate All Estate Taxes via a TCLAT

Pros

Avoid Probate

Provide for Incapacity

Protect Minor Children

Minimize Estate Taxes

Provide Asset Protection for Surviving Spouse

Cons

Ensure Plan is Carried Out

Protect Children from Blowing Inheritance

Protect Children from Creditors and Lawsuits

Protect Children from Divorce

Prevent Children from Fighting

Dynasty Trust Planning

Eliminate All Estate Taxes via a TCLAT

Provide for Incapacity Add Disability Trustee Manages trust assets in event of disability Will usually be different than Post Death Trustee Definition of Incapacity Wrong Way According to State Law Right Way Spouse and Physician Two Physicians Disability Panel

Add Disability Trustee

Manages trust assets in event of disability

Will usually be different than Post Death Trustee

Definition of Incapacity

Wrong Way

According to State Law

Right Way

Spouse and Physician

Two Physicians

Disability Panel

ADVISOR TIP Wouldn’t this be a good place to talk about Long Term Care Insurance? You are 6 times more likely to become incapacitated then die in any given year Nursing Home costs can decimate an estate Good way to protect family

Wouldn’t this be a good place to talk about Long Term Care Insurance?

You are 6 times more likely to become incapacitated then die in any given year

Nursing Home costs can decimate an estate

Good way to protect family

Protect Minor Children Guardianship Nomination Post Death Guardians Disability Guardians Temporary Guardians Common Pot Trust Don’t split shares until children are a certain age Treat children like the parents would have

Guardianship Nomination

Post Death Guardians

Disability Guardians

Temporary Guardians

Common Pot Trust

Don’t split shares until children are a certain age

Treat children like the parents would have

ADVISOR TIP Wouldn’t this be a good opportunity to talk to parents of young children about life insurance to replace income?

Wouldn’t this be a good opportunity to talk to parents of young children about life insurance to replace income?

Estate Tax Reduction Trust will split into three parts at death of first spouse Survivor Trust Bypass Trust Marital (QTIP) Trust

Trust will split into three parts at death of first spouse

Survivor Trust

Bypass Trust

Marital (QTIP) Trust

ADVISOR TIP Wouldn’t this be the perfect opportunity to talk about using life insurance as an discounted way to pay the estate tax? Use someone else’s money to pay the estate tax But keep control of the cash in the policy Stay tuned…

Wouldn’t this be the perfect opportunity to talk about using life insurance as an discounted way to pay the estate tax?

Use someone else’s money to pay the estate tax

But keep control of the cash in the policy

Stay tuned…

Provide Asset Protection for Surviving Spouse QTIP and Bypass Trusts If properly drafted, spouse will not be able to lose assets to creditors, lawsuits, remarriage and divorce, etc. You can also protect the kids against a future remarriage by requiring a pre-nup or cutting off spouse entirely

QTIP and Bypass Trusts

If properly drafted, spouse will not be able to lose assets to creditors, lawsuits, remarriage and divorce, etc.

You can also protect the kids against a future remarriage by requiring a pre-nup or cutting off spouse entirely

ADVISOR ALERT Wouldn’t this be a good place to talk about using a corporate trustee with the surviving spouse to assist with accounting, tax returns, etc.?

Wouldn’t this be a good place to talk about using a corporate trustee with the surviving spouse to assist with accounting, tax returns, etc.?

RLT Pour Over Will SURVIVING SPOUSE KIDS Durable Power of Attorney Health Care Directive BYPASS MARITAL (QTIP) HIPPA

Protective Revocable Living Trust Pros Avoid Probate Provide for Incapacity Protect Minor Children Minimize Estate Taxes Provide Asset Protection for Surviving Spouse Ensure Plan is Carried Out Protect Children from Blowing Inheritance Protect Children from Creditors and Lawsuits Protect Children from Divorce Prevent Children from Fighting Cons Dynasty Trust Planning Eliminate All Estate Taxes via a TCLAT

Pros

Avoid Probate

Provide for Incapacity

Protect Minor Children

Minimize Estate Taxes

Provide Asset Protection for Surviving Spouse

Ensure Plan is Carried Out

Protect Children from Blowing Inheritance

Protect Children from Creditors and Lawsuits

Protect Children from Divorce

Prevent Children from Fighting

Cons

Dynasty Trust Planning

Eliminate All Estate Taxes via a TCLAT

Ensure Plan is Carried Out Do not let children be trustees of each others trust They will hate each other If they are trustee of their own trust, they can do whatever they want Family members may not be willing to take on liability of being trustee If they knew what that liability was!!! Corporate Trustee solves these problems

Do not let children be trustees of each others trust

They will hate each other

If they are trustee of their own trust, they can do whatever they want

Family members may not be willing to take on liability of being trustee

If they knew what that liability was!!!

Corporate Trustee solves these problems

ADVISOR ALERT Talking to your clients about what will happen to their kids after they die is a great way to introduce your corporate trustee Increase your credibility Make clients plans work Keep assets

Talking to your clients about what will happen to their kids after they die is a great way to introduce your corporate trustee

Increase your credibility

Make clients plans work

Keep assets

Protect Children from Blowing Inheritance The average trust, when received outright, is gone within 18 months Emotional problems will follow Corporate Trustee

The average trust, when

received outright, is gone within 18 months

Emotional problems will follow

Corporate Trustee

ADVISOR ALERT Wouldn’t talking to your client about their child blowing an inheritance be a good time to talk about establishing a financial plan for the child?

Wouldn’t talking to your client about their child blowing an inheritance be a good time to talk about establishing a financial plan for the child?

Protect Children from Creditors and Lawsuits If a child does not have the power to distribute assets to themselves, they do not have the power to distribute assets to their creditors Protective Trust Corporate Trustee No Withdrawal Rights If Beneficiary Must be Trustee Use Distribution Trustee

If a child does not have the power to distribute assets to themselves, they do not have the power to distribute assets to their creditors

Protective Trust

Corporate Trustee

No Withdrawal Rights

If Beneficiary Must be Trustee

Use Distribution Trustee

ADVISOR ALERT Wouldn’t discussing children’s creditors be a good time to talk about beefing up your client’s own asset protection plan? IRAs and 401ks Life Insurance Gifting into Trusts FLLCs Etc.

Wouldn’t discussing children’s creditors be a good time to talk about beefing up your client’s own asset protection plan?

IRAs and 401ks

Life Insurance

Gifting into Trusts

FLLCs

Etc.

Protect Children from Divorce If the child has the right to receive the property outright, they have the right to put it in a joint account with their spouse, and probably will do so Protective Trust Corporate Trustee Distribution Trustee

If the child has the right to receive the property outright, they have the right to put it in a joint account with their spouse, and probably will do so

Protective Trust

Corporate Trustee

Distribution Trustee

ADVISOR ALERT Take a look at your client’s life insurance policies, and if the beneficiary is a child outright, ask if they want the child’s spouse to be a 50% owner of that policy in the event of a divorce ILIT New Policy

Take a look at your client’s life insurance policies, and if the beneficiary is a child outright, ask if they want the child’s spouse to be a 50% owner of that policy in the event of a divorce

ILIT

New Policy

Prevent Children from Fighting Neutral Corporate Trustee Keep the kids mad at Corporate Trustee, not at each other Never use one kid as another’s trustee Recipe for disaster Personal Property Most commonly fought over by kids Personal Property memorandum

Neutral Corporate Trustee

Keep the kids mad at Corporate Trustee, not at each other

Never use one kid as another’s trustee

Recipe for disaster

Personal Property

Most commonly fought over by kids

Personal Property memorandum

ADVISOR ALERT If clients have significant personal property that they want to leave to one child or another, they may want to even out distributions with life insurance to keep the peace

If clients have significant personal property that they want to leave to one child or another, they may want to even out distributions with life insurance to keep the peace

RLT SURVIVING SPOUSE KIDS BYPASS QTIP RESIDUE CHILD #1 CHILD #2

Legacy Plan Pros Avoid Probate Provide for Incapacity Protect Minor Children Minimize Estate Taxes Provide Asset Protection for Surviving Spouse Ensure Plan is Carried Out Protect Children from Blowing Inheritance Protect Children from Creditors and Lawsuits Protect Children from Divorce Prevent Children from Fighting Prevent the IRS from Getting a Second Estate Tax Cons Eliminate All Estate Taxes via a TCLAT

Pros

Avoid Probate

Provide for Incapacity

Protect Minor Children

Minimize Estate Taxes

Provide Asset Protection for Surviving Spouse

Ensure Plan is Carried Out

Protect Children from Blowing Inheritance

Protect Children from Creditors and Lawsuits

Protect Children from Divorce

Prevent Children from Fighting

Prevent the IRS from Getting a Second Estate Tax

Cons

Eliminate All Estate Taxes via a TCLAT

Prevent the IRS from Getting a Second Estate Tax Generation Skipping (“Dynasty”) Planning Uses GSTT Exemption to carve out trusts that are designed to pass free of estate and GST tax to future generations Kids use up non-exempt assets for their use

Generation Skipping (“Dynasty”) Planning

Uses GSTT Exemption to carve out trusts that are designed to pass free of estate and GST tax to future generations

Kids use up non-exempt assets for their use

ADVISOR ALERT Life Insurance is a great tool for multi-generational planning because you can leverage the GSTT Exemption

Life Insurance is a great tool for multi-generational planning because you can leverage the GSTT Exemption

RLT Survivor BYPASS QTIP RESIDUE Child Exempt Child Non-Exempt Dynasty Trust

LLCs In Estate Planning Protect Assets and Minimize Estate Taxes

Revocable Living Trusts and Asset Protection Revocable Living Trusts Provide No Asset Protection prior to death of first spouse Client’s creditors can take everything away Insurance can only cover so much

Revocable Living Trusts Provide No Asset Protection prior to death of first spouse

Client’s creditors can take everything away

Insurance can only cover so much

Asset Protection LLC

Putting Asset Protection into Your Revocable Living Trust LLC Wyoming or Nevada Charging Order is sole remedy Phantom Income Watch Out for Fraudulent Conveyance Great Tool for Protecting Assets while keeping full control More than one LLC provides better protection

LLC

Wyoming or Nevada

Charging Order is sole remedy

Phantom Income

Watch Out for Fraudulent Conveyance

Great Tool for Protecting Assets while keeping full control

More than one LLC provides better protection

LLC Estate Planning Bonus Discounting All assets in LLC will receive discount when client dies Significant reduction in estate taxes Discounts Depend on assets LLC owns Depend on Operating Agreement drafting Depend on state law Planning is everything

Discounting

All assets in LLC will receive discount when client dies

Significant reduction in estate taxes

Discounts

Depend on assets LLC owns

Depend on Operating Agreement drafting

Depend on state law

Planning is everything

Bullet Resistant, Not Bullet Proof

RLT Survivor BYPASS QTIP RESIDUE RLT Survivor Child Exempt Child Non-Exempt Dynasty Trust

THE SPOUSAL GIFTING TRUST Understanding the Ultimate Trust

Spousal Gifting Trust Removes Assets From Estate Protects Assets from Creditors Allows for Greater Gifting to Kids in Future Allows you to Retain Control of Assets Flexible Investment Options

Removes Assets From Estate

Protects Assets from Creditors

Allows for Greater Gifting to Kids in Future

Allows you to Retain Control of Assets

Flexible Investment Options

What it is Husband Creates Trust for Wife Wife Creates Trust for Husband Watch for Reciprocal Trust Doctrine Each spouse is trustee of the other’s Trust Each spouse can use their trust for Health, Education, Maintenance and Support Each spouse is main beneficiary of the other’s Trust Passes to kids, grandkids, upon death Not to other spouse

Husband Creates Trust for Wife

Wife Creates Trust for Husband

Watch for Reciprocal Trust Doctrine

Each spouse is trustee of the other’s Trust

Each spouse can use their trust for Health, Education, Maintenance and Support

Each spouse is main beneficiary of the other’s Trust

Passes to kids, grandkids, upon death

Not to other spouse

How Money Gets in SGT Crummey Gifts Spouse Kids Grandkids Use $1,000,000 exemption 5 and 5 rule Funds with at least $240,000 Have Trust Purchase Property

Crummey Gifts

Spouse

Kids

Grandkids

Use $1,000,000 exemption

5 and 5 rule

Funds with at least $240,000

Have Trust Purchase Property

Results (10% growth) $6,948,227.60 $17,370,569.00 $96,000.00 5 30 $2,419,296.00 $6,048,240.00 $96,000.00 5 20 $673,196.80 $1,682,992.00 $96,000.00 5 10 $257,879.50 $644,699.00 $96,000.00 5 5 $42,240.00 $105,600.00 $96,000.00 5 1 Estate Tax Savings Amount in SGTs Annual Gifts made to SGTs Number of Family Members Year of SGT

ADVISOR ALERT Life Insurance is an excellent purchase Remember that once a trustee beneficiary dies it goes to the kids, not back to the other spouse If life insurance is used, this doesn’t matter

Life Insurance is an excellent purchase

Remember that once a trustee beneficiary dies it goes to the kids, not back to the other spouse

If life insurance is used, this doesn’t matter

Supercharge the SGT Combine with discounts in LLC to produce amazing results Example 5 family members (spouses, three kids) $12k per year each family member 10% growth 33% discount $18k per person instead of $12k $1,500,000 exemption instead of $1,000,000

Combine with discounts in LLC to produce amazing results

Example

5 family members (spouses, three kids)

$12k per year each family member

10% growth

33% discount

$18k per person instead of $12k

$1,500,000 exemption instead of $1,000,000

Results of Supercharged SGT $10,422,341 $26,055,853 $144,000 33% $96,000 5 30 $3,628,944 $9,072,360 $144,000 33% $96,000 5 20 $1,009,795.20 $2,524,488 $144,000 33% $96,000 5 10 $386,819 $967,048 $144,000 33% $96,000 5 5 $63,360 $158,400 $144,000 33% $96,000 5 1 Estate Tax Savings Total FMV of SGT Actual FMV of Gifts Discount Discounted Value of SGT Gifts # of Family Members Year Of SGT

RLT Survivor BYPASS QTIP RESIDUE RLT Survivor Child Exempt Child Non-Exempt Dynasty Trust Husband Wife

Avoid the Estate Tax Entirely Use a Testamentary Charitable Lead Annuity Trust (TCLAT) At Death Any amounts subject to estate tax go to TCLAT Estate Tax Free Zero Out the Remainder using 7520 rate Whatever’s left goes to kids tax free Results

Use a Testamentary Charitable Lead Annuity Trust (TCLAT)

At Death

Any amounts subject to estate tax go to TCLAT

Estate Tax Free

Zero Out the Remainder using 7520 rate

Whatever’s left goes to kids tax free

Results

TCLAT $1,000,000 that is subject to estate taxes 10% growth 20 years after death $1,687,493 to charity $1,894,941.95 to kids Plus possible foundation management fees Compare $500,000, same terms $3.3 million to kids (assuming none distributed) But $500k went to IRS No charitable legacy

$1,000,000 that is subject to estate taxes

10% growth

20 years after death

$1,687,493 to charity

$1,894,941.95 to kids

Plus possible foundation management fees

Compare $500,000, same terms

$3.3 million to kids (assuming none distributed)

But $500k went to IRS

No charitable legacy

RLT BYPASS RESIDUE RLT Child Exempt Child Non-Exempt Dynasty Trust Wyoming Close LLC Husband Wife Spousal Gifting Trusts Survivor QTIP TCLAT

THE END QUESTIONS???