2009 Estate Planning Program


Published on

Estate Planning Program that I present with Financial Planners
copyrighted 2009

  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

2009 Estate Planning Program

  1. 1. Estate Planning Taking Care of Your Family and Minimizing Taxes Speaker: Robert LeChevallier Attorney at Law
  2. 2. Why Most People Fail To Plan Their Estate! <ul><li>Why? </li></ul><ul><li>Fear of mortality </li></ul><ul><li>Not sure who should handle estate/trust </li></ul><ul><li>Not sure how to distribute </li></ul><ul><li>Does not know the value of their assets </li></ul><ul><li>Not aware of tax consequences of failure to plan </li></ul><ul><li>Symptoms! </li></ul><ul><li>Procrastination </li></ul><ul><li>Failure to complete estate plan. </li></ul>
  3. 3. Four Ways Assets Are Transferred On Death <ul><li>Contract ex. (life insurance and retirement plans </li></ul><ul><li>Operation of Law (ex jointly owned property with right of survivorship) </li></ul><ul><li>Will (subject to probate) </li></ul><ul><li>Revocable Trusts </li></ul><ul><li>Irrevocable Trusts </li></ul>
  4. 4. Contract <ul><li>Payable on Death </li></ul><ul><li>Transfer on Death </li></ul><ul><li>Life Insurance </li></ul><ul><li>Retirement Plans </li></ul>
  5. 5. Operation of Law <ul><li>Joint Tenants with Right of Survivorship </li></ul><ul><li>Tenants by the Entirety (husband and wife) </li></ul><ul><li>Community Property (WA, CA, ID) </li></ul>
  6. 6. Estate Planning Terms
  7. 7. The Will <ul><li>If you do not have a will the State “writes” one for you </li></ul><ul><li>Assets pass according to the “intestate” law of succession </li></ul><ul><li>Advantages of a will: </li></ul><ul><ul><li>Simpler to manage during lifetime than a trust </li></ul></ul><ul><ul><li>Court supervision over estate administration </li></ul></ul><ul><ul><li>Can waive bond requirement </li></ul></ul><ul><li>Disadvantage of a will is that it is subject to probate </li></ul><ul><ul><li>Public information </li></ul></ul><ul><ul><li>Time and cost to probate estate </li></ul></ul>
  8. 8. Probate Process <ul><li>Most states allow a small estate to avoid a full probate. Oregon: 50k personal property; 150k real property (2009) </li></ul><ul><li>Probate is to assure that the intent of the decedent is followed </li></ul><ul><li>Attorney is hired by the personal representative </li></ul><ul><li>Probate Court takes control of estate, appoints Personal Representative, supervises payment of debts and orders distribution of assets </li></ul><ul><li>Legal notice to interested parties is required to be published in local paper </li></ul><ul><li>Decedent’s assets must be inventoried by personal representative and appraised if necessary </li></ul><ul><li>Four month creditor waiting period </li></ul><ul><li>Notice to Estate Admin -Department of Human Services </li></ul>
  9. 9. Probate <ul><li>Advantage </li></ul><ul><li>Court supervised process </li></ul><ul><li>Provides notice and allows objection by heirs and/or creditors </li></ul><ul><li>Time limit on claims </li></ul><ul><li>Disadvantage </li></ul><ul><li>Time </li></ul><ul><li>Expense </li></ul><ul><li>Lack of control by family </li></ul>
  10. 10. Trusts <ul><li>Revocable </li></ul><ul><ul><li>Created during the settlor’s lifetime </li></ul></ul><ul><ul><li>Can be amended so long as the settlor has capacity </li></ul></ul><ul><ul><li>Typically used to avoid probate </li></ul></ul><ul><li>Irrevocable </li></ul><ul><ul><li>Revocable trusts become irrevocable upon settlor’s death </li></ul></ul><ul><ul><li>Lifetime irrevocable trust for advanced planning </li></ul></ul><ul><ul><li>Testamentary trusts (trusts established in a decedent’s will) </li></ul></ul><ul><ul><li>These are trusts that cannot be modified easily without consent of settlor, trustee and beneficiaries </li></ul></ul>
  11. 11. Revocable Trust <ul><li>Person creating trust can be the settlor, trustee and beneficiary until their death, resignation and/or incapacity </li></ul><ul><li>Any items not transferred to the Trust will be distributed according to the will </li></ul><ul><li>No probate court jurisdiction, therefore no probate fees </li></ul><ul><li>Avoids a conservatorship in the event of incapacity </li></ul><ul><li>Trust Administration private and quicker than probate </li></ul>
  12. 12. Revocable Trusts <ul><li>Advantage </li></ul><ul><li>Private </li></ul><ul><li>Retain control </li></ul><ul><li>Not subject to mandatory timelines like a probate </li></ul><ul><li>Procedure available to limit claims </li></ul><ul><li>Disadvantage </li></ul><ul><li>No court supervision </li></ul><ul><li>Beneficiary(ies) have right to enforce terms of trust </li></ul><ul><li>Uniform Trust Code </li></ul>REVOCABLE TRUSTS
  13. 13. Who Should Be My Successor Trustee <ul><li>Person who has financial capabilities </li></ul><ul><ul><li>Liability of Trustee- Uniform Trust Code </li></ul></ul><ul><ul><li>Need to be detail person </li></ul></ul><ul><ul><li>Ability to relate to beneficiaries </li></ul></ul><ul><ul><li>Has time available to properly do the job. </li></ul></ul><ul><li>Family Members? </li></ul><ul><ul><li>Short term or long term </li></ul></ul><ul><li>Should I use a bank or financial institution? </li></ul><ul><li>Private trust companies </li></ul><ul><li>Costs </li></ul>
  14. 14. What About The Kids? <ul><li>At what ages should I distribute my estate to my children? </li></ul><ul><li>Disabled children </li></ul><ul><li>Spendthrift children </li></ul><ul><li>His and Hers —second marriages </li></ul>
  15. 15. Additional Uses of Trusts <ul><li>Discretionary Trusts (income or principal) </li></ul><ul><li>Incentive Trusts (i.e. if you graduate…) </li></ul><ul><li>Education Trusts (for college) </li></ul><ul><li>Grandchildren’s Trusts </li></ul><ul><li>Protect children in event of spouse’s subsequent marriage(s) </li></ul><ul><li>Protect family assets in event of children’s divorce </li></ul><ul><li>Spendthrift- protect children from creditors </li></ul>
  16. 16. Additional Estate Planning Documents <ul><li>Pour-over Will </li></ul><ul><li>Durable Power of Attorney </li></ul><ul><li>Advance Directive (Living Will) </li></ul>
  17. 17. Tax Planning Terms
  18. 18. Tax Planning Wills and Trusts <ul><li>Husband and wife may be able to use federal tax exemption twice </li></ul><ul><li>Federal exemption will increase from $2.0 million in 2009 to $3.5 million by 2009, and the federal estate tax repealed in 2010. Unless congress changes the law, the federal exemption will be $1.0 million in 2011. </li></ul><ul><li>Oregon exemption is $1.0 million </li></ul>
  19. 19. State Inheritance Tax <ul><li>Oregon did not match increase in federal exemption. </li></ul><ul><li>State Estate Tax on top of Federal Estate taxes </li></ul><ul><li>Exemption = $1.0 million in 2009 </li></ul><ul><li>Tax rate between 4% and 16% </li></ul><ul><li>Oregon Special Marital Election to postpone state estate tax until surviving spouse passes away </li></ul><ul><li>Oregon Trust to track assets </li></ul><ul><li>WA exemption = $2.0 million in 2009 </li></ul>
  20. 20. Oregon Inheritance Tax Rates 7.2 70,800 2,040,000 1,540,000 16.0 1,082,800 ------ 10,040,000 14.4 786,800 9,040,000 8,040,000 12.8 522,800 7,040,000 6,040,000 11.2 290,8000 5,040,000 4,040,000 8.8 146,8000 3,040,000 2,540,000 6.4 38,8000 1,540,000 1,040,000 4.8 18,000 840,000 640,000 3.2 3,600 440,000 240,000 1.6 400 140,000 90,000 PERCENT $ $ $ Rate of tax on excess over amount in column 1 Tax on amount in column 1 Adjusted taxable estate less than Adjusted taxable estate equal to or more than Column 4 Column 3 Column 2 Column 1
  21. 21. Disclaimer Wills or Trusts <ul><li>Allows spouse to “disclaim” and decide how much to fund bypass or credit shelter trust within 9 months of death </li></ul><ul><li>Spouse cannot take benefit of asset before disclaimer is filed </li></ul>
  22. 22. Wills Or Trusts With Credit Shelter Provisions <ul><li>Formula puts portion of estate in trust for spouse who may receive income until death plus principal as needed for health, education, maintenance and support. Upon spouse’s death it will be distributed to children. </li></ul><ul><li>No flexibility for surviving spouse </li></ul>
  23. 23. Charitable Deduction <ul><li>Gift to charities or charitable trust qualify for charitable deduction </li></ul><ul><li>IRA’s </li></ul><ul><li>Gifts of life insurance </li></ul><ul><li>Gifts of appreciated property (need appraisal) </li></ul><ul><li>Gifts to Community Foundations (donor advised funds) </li></ul><ul><li>Charitable remainder trusts </li></ul><ul><li>Charitable lead trusts </li></ul>
  24. 24. How Often Should I Update My Estate Plan? <ul><li>Remarriage (revokes a will) </li></ul><ul><li>Divorce (revokes provision in favor of spouse) </li></ul><ul><li>Death of a Spouse </li></ul><ul><li>Change in family situation </li></ul><ul><li>Change in tax laws </li></ul><ul><li>Review every 5 years </li></ul>
  25. 25. NEXT STEPS! <ul><li>Prepare a will, a durable power of attorney and advance directive </li></ul><ul><li>Prepare a Revocable Trust (if over age 55; high net worth or assets in multiple states) </li></ul><ul><li>Do appropriate estate and income tax planning </li></ul><ul><li>If you have a taxable estate start a gifting program to family </li></ul><ul><li>Once family is taken care of, consider charitable gifts </li></ul>
  26. 26. QUESTIONS? For more information give us a call ( 503) 620-8900 3 Centerpointe Drive, Suite 250 Lake Oswego, OR 97035 www.buckley-law.com