The document discusses estate planning strategies and tools. It defines estate planning as controlling your property while alive, planning for disability, and transferring assets to beneficiaries as desired at the lowest cost. Key strategies include working with an attorney, establishing an updating program, and ensuring successors utilize post-death services. Estate plans must adapt to changes in personal situation, laws, and attorney experience. Overall costs include planning documents, updates, and post-death transfers. Living trusts typically cost 1% of the estate compared to 3-5% for probate. The document promotes utilizing tools like trusts, charitable gifts, partnerships, and stretch IRAs to reduce taxes and costs.

1. The Truth About Estate Planning
“The Basics and Beyond”
A Recipe for Successful Estate Planning,
Retirement Preservation and Post Mortem
Transfer of Assets
Sean Gjerde LL.M.
Attorneys & Counselor at Law
(916)483-3040

2. To quote the
will exactly, it
reads:
“I, Amos
Thornbury,
being of sound
mind and
body, have
spent it all.”

3. Estate Planning Overview
•Proper Asset Ownership
•Control of Process
• What to Do
• How to Do It
• How to Pay for It
Keys to an Effective Estate Plan

4. SAVE
TAXES
EXPAND WEALTH
WEALTH
FAMILY
ME
“I wanttocontrolmypropertywhilealiveandwell,
planformeandmylovedones if I becomementallydisabled,
andthengivewhatI havetowhomIwant,
whenIwantandthewayIwant--
all atthelowestpossibleoverallcosttomeandthoseIlove.”
PLANNING PYRAMID

5. Estate Planning Overview
Definition of Estate Planning
I Want to Control My Property While I’m
Alive and Well;
Plan for Me and My Loved Ones if I
Become Disabled;

6. Estate Planning Overview
Definition of Estate Planning
• Give What I Have
• To Whom I Want
• When I Want
• The Way I Want
All at the Lowest Possible Cost to Me and
Those I Love

7. Estate Planning Strategy
• Work with a Counseling Oriented Attorney
• Establish and Maintain a Formal Updating
Program
• Assure Successors Utilize Fixed Fee
Services After Death

8. Three Types of Estate Plans
• Married Couple
Under $1,000,000
• Married Couple
Over $1,000,000
• Unmarried Individual

9. Client Personal Planning Goals
• Catastrophic Illness Protection
• Creditor Protections
• Remarriage & Bloodline Protections
• Divorce Protections
• Controlling distributions of the estate
• Transmitting values to family members
• Estate Tax & Cost Reduction

10. Your Assets
Federal Income Tax
Federal Estate Tax
State Income Tax
Attorney’s Fees
Funeral Costs
Court Costs
Outstanding
Debt
Your Family

11. Key Tax Savings Provisions
• Unlimited Marital Deduction
• *$1,000,000 Exemption Equivalent for the
Unified Gift & Estate Tax Credit
*(2003 & Post Jan. 1, 2011)

12. Federal Estate Tax Reduction
Year
2001
2002
2003
2004
2005
Amount
$ 675,000
1,000,000
1,000,000
1,500,000
1,500,000
Tax Relief Act of 2001 (EGTRRA):
“Coupon” Amount

13. Federal Estate Tax Reduction
Year
2006
2007
2008
2009
2010
2011
Amount
$ 2,000,000
2,000,000
2,000,000
3,500,000
Estate Tax Repealed
1,000,000
Tax Relief Act of 2001 (EGTRRA):
“Coupon” Amount

14. Estate Tax Planning
With Married Couples
Example: John and Mary Sample have an estate that has an
estimated $2,000,000 fair market value (this includes net worth,
retirement, and life insurance). John and Mary have accumulated all
their wealth during their marriage (community property). They have
one son named Tom. They have no estate plan.
John dies on Jan. 1, 2003.
His $1,000,000 (half the community)
goes to Mary.
Mary now owns the full $2
million. No tax because of
UMD, but John’s exemption
expires.
Mary dies on Feb. 2, 2003.
Tax Calculation: Gross Estate 2,000,000
Estate Tax 780,800
Mary’s Exemption - 345,800
Net Tax to IRS $435,000

15. Estate Tax Planning
With Married Couples
Example: Same assumptions, except that John and Mary have created a Revocable Living Trust that contains estate tax
provisions. Also, this example assumes that assets have been properly funded into the trust.
John dies Jan. 1, 2003.
Mary dies Feb. 2, 2003.
Tax Calculation:
Family Trust – Passes to Tom without any estate tax. John’s coupon was used to pass any principal and
accumulated interest to Tom without any estate taxes.
Marital Trust – Any principal and accumulated interest will be estate taxable, however the survivor’s
coupon can still be used. In this case:
Gross Estate 1,000,000
Estate Tax 345,800
Mary’s Exemption 345,800
Net Tax to IRS 0
RLT
2,000,000
Marital
Trust
$1,000,000
100% Access
Family
Trust
$1,000,000
HEMS

16. RLT
Marital Family
Husband
Joint
Insurance
401(k)
IRA
Wife
Excess 1st $1,000,000
(2003)

17. RLT
Marital Family
Husband
Joint
Insurance
401(k)
IRA
Wife
Excess 1st $1,000,000
(2003)
Estate Taxes & Personal Planning Goals
“The Key is to Coordinate the Estate Plan & the Financial Plan”

18. Additional Tools & Concepts
Aggregate Theory Agreement

19. Additional Tools & Concepts
Stretch Out IRA Strategies
• No Qualified DB
• Individual QDB
• Trust QDB

20. Stretch Out IRA Example
Example: John and Mary Sample have an estate that has an
estimated $2,000,000 fair market value. $1,000,000 of this is in an
IRA in John’s name. They have one son named Tom who is age 25.
They have no estate plan.
John dies on Jan. 1, 2003.
His $1,000,000 IRA
goes to Mary.
Mary now owns the full $1
million IRA in her name as
she did an IRA Spousal
Rollover. No tax because she
is the spouse.
Mary dies on Feb. 2, 2003
and has not yet made proper
beneficiary designations.
Income
Tax Calculation: IRA forced W/D $1,000,000
(in 1 to 5 yrs.)
Approx.
Income Tax 450,000
NET TO HEIRS $550,000

21. Stretch Out IRA Example
Example: John and Mary Sample have an estate that has an estimated
$2,000,000 fair market value. $1,000,000 of this is in an IRA in John’s
name. They have one son named Tom who is age 25.
John dies on Jan. 1, 2003.
His $1,000,000 IRA
goes to Mary.
Mary now owns the $1 million
IRA in her name as she did an
IRA Spousal Rollover.
Mary dies on Feb. 2, 2003 and has named a proper QDB Trust.
Income
Tax Calculation: *IRA forced W/D 0
NET TO INVEST $1,000,000
**Future Value of $1,000,000 in 30 years
if earn 7% and adjust for 3.5% inflation. $3,000,000
Tom’s early retirement at Age 55 (6%) $180,000 yr.
**Benefit is that the $450k tax billed is deferred. This creates $1.8 Million of NEW WEALTH.
*Actual is $16,667 in Yr. 1 based on Tom’s life expectancy.

22. Estate Planning Strategy
• Work with a Counseling Oriented Attorney
• Establish and Maintain a Formal Updating
Program
• Assure Successors Utilize Fixed Fee
Services After Death

23. Estate Planning Overview
Three Types of Change An Estate Plan Faces
• Changes in Your Personal Situation
• Personal
• Financial

24. Estate Planning Overview
Three Types of Change An Estate Plan Faces
•Changes in the Legal Environment
• Tax
• Non-Tax (Personal Protections)

25. Estate Planning Overview
Three Types of Change An Estate Plan Faces
•Changes in Your Attorney’s Experience
• Static vs. Continuous Improvement?

26. Estate Planning Strategy
• Work with a Counseling Oriented Attorney
• Establish and Maintain a Formal Updating
Program
• Assure Successors Utilize Fixed Fee
Services After Death

27. Estate Planning Overview
Three Factors of Overall Cost
• The Cost of the Documents
• The Cost of Updating
(Or Failing to Update)
• The Cost After Death
• Transfer of Assets
• Death Tax Return Preparation

28. Estate Planning Overview
Fees
• Traditional Probate
–3 to 5%
• Living Trust Planning
–About 1%

29. • What to do about the
taxes still due to the IRS?

31. Advance Planning Opportunities
• Irrevocable Life Insurance Trusts
• Charitable Planning - Lifetime
• Charitable Planning - Testamentary
• Family Limited Partnerships
• Gifting Strategies
• Qualified Personal Residence Trusts
• Stretch Out IRA Strategies

32. The Truth About Estate Planning
“The Basics and Beyond”
A Recipe for Successful Estate Planning,
Retirement Preservation and Post Mortem
Transfer of Assets
Sean Gjerde
Attorneys & Counselors at Law
(916)483-3040