3. ABCs of Estate Planning.………………..…4
How Different Assets Transfer …………..6
The Revocable Living Trust………..………9
Other Conditions………………….……......13
The Estate Plan Portfolio…..……….…….15
What’s Next …………………………………..17
TABLE OF CONTENTS:
// Page 3
Disclaimer
All the material contained in this book is provided foreducational and informational purposes only.
No responsibilitycan be taken for any results or outcomes resulting from theuse of this material.
While every attempt has been made to provide information that is both accurate and effective,
the author does not assume any responsibility for the accuracy or use/misuse of this information.
4. We are going to focus on several basic
estate planning concepts so you can
better understand how this process
works. Let’s begin with you or the
both of you if you are married.
Actually, all of us have an estate
because many of us own:
Real Property:
Your home, rental
property or other
real estate
Personal Property:
Clothes, furniture, jewelry
TV, automobiles, etc
Titled Property:
Bank & Brokerage accounts,
Investments, Life Insurance,
Retirement plans, etc
CHAPTER 1:
ABC’s Of Estate Planning
// Page 4
5. These three property categories make up your assets. So, we
will call this the A component.
We all have heirs or beneficiaries. Typically, these are your
children, those who you want to receive your assets after you
pass. This could also be a charity like your church. So, we will
call this the B component.
Simply put, the objective of
an Estate Plan, after your
passing, is to make
sure A gets to B.
However, there are sometimes conditions. A condition can be a
future, uncertain, event. And, if the event happens something
needs to be done. As an example, if a beneficiary were only
twelve years old, he would be unable to receive your assets
until he reached a certain age, usually 18 or above.
Therefore, a provision would need to be made to allow for this
or the court would step in and take control. In this
case, assets would be held for the benefit of this beneficiary.
So, we will call this the C component.
The objective then is to get A to B regardless of or that
includes C!
ABCs of Estate Planning
// Page 5
A
B
6. I once heard an attorney say that it is estimated that married
couples owned as much as 90% of their assets in the form of
Joint Tenancy With Right of Survivorship – JTWRS. Let’s see
how this works and use the house as an example.
It’s quit simple, when the first spouse dies the surviving
spouse receives full title of the house.
Therefore, if your car, bank accounts and investment
accounts and other assets were titled JTWROS, the surviving
spouse would get ALL these assets with essentially no hassle
or any court proceedings!
Now, the surviving spouse would hold the title of the house,
and other assets that were JTWROS as sole ownership,
unless he or she made arrangements to change the form of
ownership.
CHAPTER 2:
How Different Assets Transfer
// Page 6
7. The next form of ownership is Sole Ownership.
Obviously, if you are single, most if not all
your assets would be owned in this format.
And, the surviving spouse we just
mentioned would own those assets
that were in JTWROS now as sole ownership.
So, what happens when a person passes with assets held in
this manner?
These assets normally now transfer by Will
through the Probate process. If you have not
created a Will, the State has a “default” Will
that determines who will receive your
assets.
A couple of other points – the typical cost of Probate can range
from 1% to 8% of the value of the assets being probated. This
could be several hundred to several thousand dollars.
Additionally, it usually takes several months to complete the
probate process before the finale transfer of assets is made
to the beneficiaries.
Most people would prefer to use a different method because
of the costs and time of this process.
// Page 7
ABCs of Estate Planning
8. Another way an asset can
transfer is by Beneficiary
Designation.
Typically, life insurance
and qualified plans –
IRA’s, 401k’s, etc. fall into
this category.
Other assets can also
transfer to a beneficiary.
Bank accounts can be
Payable-on-Death – POD
and securities can be
Transfer-on-Death - TOD
And, a number of States
now allow Beneficiary
Deeds to transfer your
house to a beneficiary.
Having an asset go
directly to a beneficiary is
very popular as, normally,
the beneficiary gets the
asset without any
Probate proceedings.
// Page 8
ABCs of Estate Planning
“57% of Adults
Don’t Have a
Will”
Source: Rocket Lawyer.com
March, 20111
9. The next way an asset can transfer is by using a Revocable Living
Trust. For most people, this is usually the BEST way to transfer
assets to a beneficiary. Let’s see how the Trust works:
When you create a Trust:
You become the Grantor. This means you say who will get
your assets, when and how.
You are the Trustee. This means you hold title to your assets
in the Trust. This is why you transfer all your assets into your
Trust.
You are the Beneficiary. This means you continue to enjoy the
use of all your assets.
CHAPTER 3:
The Revocable Living Trust
Revocable Living Trust
// Page 9
10. Your Beneficiaryor beneficiaries are
those who will get your assets after
you pass.
Typically, these are your children . . .
. . . they could also be a grandchild, etc.
Finally, you select a Successor Trustee. This is one who will
carry out your instructions if you become incapacitated or when
you die. Typically, adult children are chosen for this position.
As you can see, the Trust becomes a “holding place” for all
your assets, making it real easy to transfer these when
appropriate.
ABCs of Estate Planning
// Page 10
11. When the first spouse dies, usually there is not a great deal
that needs to be done. In some cases, assets would need be
re-titled into multiple Trusts.
However, when the surviving spouse dies, the Successor
Trustee takes over and follows the Trust instructions to
distribute the assets to the beneficiaries:
ABCs of Estate Planning
// Page 11
12. If there is a condition, such as: a Beneficiary is still a minor,
the Trustee will “hold” the assets in a Holding Trust and pay
out income from the Trust and principal for certain reasons
such as a college education:
This is a good example of how the Trust accomplishes the
objective of having A go to B while taking into consideration C!
Perhaps, you can think of a condition in your personal situation
that a Trust would allow for and therefore meet your objectives.
ABCs of Estate Planning
// Page 12
Holding Trust
13. Up to this point, we have referred to conditions as applying to
assets and the beneficiary. We have seen that the Revocable
Lining Trust is an excellent vehicle because:
1) ALL assets can transfer in one manner – to a beneficiary
2) If there is a Beneficiary condition [a distribution issue]
– the Trust can “hold” assets until it is appropriate to
distribute directly to a beneficiary
In this section we are going to look
at several conditions that could apply
to you. Additionally, we will look
at those documents that, in general,
are used to offset each condition.
If you become incapacitated, your chosen agent can make
financial decisions and / or medical decisions on your behalf.
There are two sets of documents to accomplish these objectives.
CHAPTER 4:
Other Conditions
Incapacitation Durable Powers of Attorney
// Page 13
14. If you should go into a comatose or vegetative sate with no
signs of recovery, your chosen agent, usually selected in the
Durable Power of Attorney for Health Care makes the decision
to continue life support systems based on your wishes. There is
also an Advance Health Care Directive that is sometimes
used for these types of decisions.
If you forget to transfer an asset into your Trust, the Last Will,
also called a Pour Over Will directs assets may own at your
death to go to your Trust. This allows for ALL of your assets to
be distributed to your beneficiaries the way you want. Assets that
flow from the Will to your Trust may be subject to Probate. This
is why it is important to transfer ALL your assets into your Trust.
ABCs of Estate Planning
// Page 14
Comatose State Living Will
Forget to Transfer Last Will (Pour Over)
15. As you can see, you really need more than one
document if you are to meet the basic Estate
Planning objective of, after your passing, getting
A [Assets] to B [Beneficiaries] regardless of,
or taking into consideration, C [Conditions].
It is also would be helpful to have explanation material and
other forms to make changes and be able to administer your
Estate Planning objectives over time.
The Estate Plan Portfolio is designed to accomplish all these
objectives. The Portfolio is made up of ten Sections with four
purposes:
1) Four Document Sections – Meet ALL Estate Planning goals
2) Three Funding Sections – Transfer assets into your Trust
3) Two Information Sections – Provide helpful information
4) One Change Form Section – Forms for changes, etc.
CHAPTER 5:
The Estate Plan Portfolio
// Page 15
16. // Page 16
ABCs of Estate Planning
Allows someone to make financial and
medical decisions, if you can’t
Estate Plan Portfolio
Allows your assets to go to who
want, when and how you want
Allows you to state your choice about
continuation of life support systems
Allows you to be sure ALL your assets
flow through your Trust
Summary of your Trust so one will
change title of an asset to your Trust
Lists who and how your assets are
owned that are placed in your Trust
Allows you to change the title or
beneficiary designation of your assets
Describes the different sections of
your Estate Plan Portfolio
Provides instructions for the Trustee to
know what to do for administration
Forms to make changes and carry out
Trust administration issues
Revocable Living Trust
Durable Powers of Attorney
Living Will & Directives
Last Will (Pour Over)
Certificate of Trust
Schedules, Ledgers & Deeds
Transmittal Letters
Portfolio Summary
Trustee Memorandum
Administrative Documents
17. Contact the person that provided you this e-book.
That person can assist you by answering any questions you
may have. He or she can also begin the process with you to
collect the initial information so that you can begin the process
to have your own personal Estate Plan developed.
They will be able to give you a price quote that will include,
when appropriate, the fee for an attorney.
They will also be able to assist you to complete the process.
________________________
CHAPTER 6:
What’s Next
// Page 17
