Ensure peace of mind with a comprehensive Family Protection Plan

Ensure peace of mind with acomprehensive Family Protection Plan.

Planning for Your Future is Essential

• Tip #1 – Make sure your will is up to date.

• Tip #4 – Use trusts appropriately.

• Tip #7 – Consider making a video to pass on your values.

• Tip #5 – Be sure to choose the right guardians and

financial trustees.

• Tip #3 - Use the appropriate powers of attorney.

• Tip #2 – Have your will properly signed and witnessed.

• Tip #6 - Plan for taxes – estate, gift and other taxes.

Seven Tips for Protecting Your

Family and Assets

What is aFamily Protection Plan?

• A Family Protection Plan is a plan for the preservation and distribution of your wealth in the future that includes your wealth, health, family and values.

Your Estate

• Home

• Retirement accounts• Life insurance

• Bank accounts• Automobiles

• Investments• Business interests

Notes About Life Insurance

• Whole life - cash value‒ Can take out loans from the policy ‒ No tax on interest or earnings

• Term – coverage for a specified period‒ Inexpensive premiums• Provides cash the estate can use

to pay expenses

A will, by itself, may not be enough. It may not:• Protect you if you are not able to

make decisions for yourself,

• Prevent you from outliving your income, or

• Provide for future contingencies.

•Will

Depending on your situation, you may need a:

•Durable Power of Attorney

•Trust

•Medical Power of Attorney

•Guardianship

•Health Care Directive

Ways to Transfer Property

• A revocable living trust

• A will

• Joint tenancy in real estate, bank accounts, or other personal property

• Beneficiary designations on life insurance and retirement accounts

Ways to Transfer Property

• Difference between a Will and a Trust

• A trust is a relationship in which a person, the settlor, gives property to another person, the trustee, to protect and use it for the benefit of third person, the beneficiary.

• A will is a legal declaration by which a person, the testator, names one or more persons to manage his or her estate and provides for the distribution of his or her property at death.

Tip #1 – Make sure your willis current.

Make Sure Your Will is Current

• Your will should have your proper marital status and desired beneficiaries.

Have you been married or had a child since you last made your will?

• An up-to-date will is an important piece of a Family Protection Plan.

1) If you do not have a will, your property will be distributed to your surviving spouse or registered domestic partner, children and/or parents according to the Washington State intestate succession laws.

Make Sure Your Will is CurrentReasons to Have a Will

Make Sure Your Will is CurrentReasons to Have a Will

2) If you do not have a will, the State will decide who will be the guardians of your minor children.

3) To give an item of intrinsic value to the person you know would most appreciate it.

Make Sure Your Will is CurrentReasons to Have a Will

• Photography equipment

• Examples:

• A music collection

• A painting

• An expensive bicycle

• Jewelry

Tip #2 – Make Sure Your Will is Properly Signed and

Witnessed

Make Sure Your Will isProperly Signed and

Witnessed

In Washington, a will must be:

Requirements for a Valid Will

• Signed in front of two competent witnesses who:• Witness the testator signing the will

• Signed by testator (at least 18 years old)

• Sign the will or an affidavit in the presence of the testator and at the testator’s request.

Make Sure Your Will isProperly Signed and

WitnessedA will is valid in Washington State if:

Out-of-State Wills

• It is signed in the manner required by the state of the testator’s home,

• At the time it is signed or at the time of the testator’s death.

• It is signed in the manner required by the state in which it is signed, or

Tip #3 – Have the ProperPowers of Attorney in Your

Plan• Financial

Power of Attorney• Durable Power of Attorney for Health Care

• Advance Health Care Directive

Proper Powers of Attorney

• A durable financial power of attorney is a simple, inexpensive, and reliable way to arrange for someone to manage your finances if you cannot.

Financial Power of Attorney

• A “springing” power of attorney goes into effect only after a doctor certifies that you have become incapacitated.

Proper Powers of Attorney

• A Durable Power of Attorney for Health Care appoints a person to make decisions regarding your medical treatment if you cannot make these decisions yourself.• A Health Care Directive (“Living Will”) sets forth your wishes regarding life-sustaining care.

Advance Directive

Tip #4 – Use Trusts Appropriately as part of your

Family Protection Plan

Use Trusts Appropriately

• Revocable trust

• Irrevocable Trust

Kinds of Trusts

• Grantor may terminate the trust and reclaim the property.• Trust property will be included in estate.

• Grantor may not terminate the trust.

• Trust property will not be included in estate.

Use Trusts Appropriately

• In some cases, a will which is probated may be preferable to a living trust because it requires little effort to maintain.

• A revocable living trust may be used to avoid probate and protect your privacy if desired. However, it requires your attention during your lifetime.

Use Trusts Appropriately

• Probate, with a neutral third party, is uniquely suited to resolve any disputes.• Generally, it takes about six months to a year in Washington State.• Creditors’ claims may be resolved in probate by filing a Probate Notice to Creditors. (There is also a Nonprobate Notice to Creditors.)

A Word About Probate

Use Trusts Appropriately

• A spendthrift trust may protect funds from foolish decisions and from creditors.

A trust may be used to provide for minor children

• Set criteria (“ascertainable standards”) should be used to make distributions.

Use Trusts Appropriately

• Consider your own financial needs during your lifetime

Considerations for a Children’s Trust

• May want to postpone bequest until child reaches a certain age or ages

• Consider the maturity of the beneficiaries

Use Trusts Appropriately

• Allows you to provide funds for supplemental purposes, not for basic support.

A Special Needs Trust can provide care for disabled relatives

• Allows you to provide funds to your relative without disqualifying them from means-tested benefits.

Use Trusts Appropriately

• You can name a trustee who will care for your pet.• You can determine an amount to be distributed regularly and specify how the money should be spent for your pet’s care.

Pet Trust

Tip #5 – Be sure to choose the right guardians and

financial trustees.

Choose the Right Guardians/Trustees

• Minor children• Separate financial trustee &

guardian• Consider person’s skills & expertise

• Personal qualities of potential guardian or trustee

• Contingencies• Incapacity or death of named

guardian• Divorce of named guardian

Things to Consider

Choose the Right Guardians/Trustees

• Understands the beneficiary’s needs

Qualities for a Guardian or Trustee

• Makes good, well-informed, decisions

• Able to manage own finances

• Similar values

• Relationship with you/your beneficiary

Tip #6 - Plan for Estate & Gift and Other Tax

ConsequencesConsider:

• Capital gains

• Generation-Skipping Tax

• Lifetime gifts

• Washington State and federal taxes

• The use of family limited partnerships

Plan for Tax Consequences

• The Estate Tax Return (and payment of estate taxes) will be due 9 months after the date of death.

Estate Tax Return

Gross Estate – Debt + Insurance = Taxable Estate

How is the Federal Estate Tax Calculated?

Plan for Tax Consequences

Federal Estate Tax RatesYear Exemption

AmountTop Tax Rate

2005 $1,500,000 47%2006 $2,000,000 46%2007 $2,000,000 45%2008 $2,000,000 45%2009 $3,500,000 45%2010 $5,000,000 35%2011 $5,000,000 35%2012 $5,120,000 35%2013 $5,250,000 40%

Portability of Estate Tax Exemption

Plan for Tax Consequences

• Applies if a spouse dies without using his or her full estate tax exemption.• The surviving spouse may use the deceased spouse’s unused federal estate tax exemption.

• Must timely file a timely estate tax return and elect to add the unused exemption to his or her own exemption.

Washington State Estate Tax

Plan for Tax Consequences

• In Washington State, the exemption amount is $2,000,000 per person.• Starting in 2014, this will be indexed for inflation

Washington State Estate Tax• In 2014, certain family-owned

businesses will receive an estate tax exemption of up to $2.5 Million.

Plan for Tax Consequences

• The value of the decedent’s interest in the business must be greater than 50% of the taxable estate and must not exceed $6M.

• The decedent must have actively worked in the business and must leave the interest to a family member or another existing owner.

Plan for Tax Consequences

• In a CRT, the donor sets aside money in a trust and reserves a right to regular payments. The remainder is given to a designated charity at death.

Charitable Remainder Trusts

Plan for Tax Consequences

• The trust pays no tax when it later sells appreciated property.

Tax Advantages of Charitable Remainder Trusts

• The donor receives a charitable deduction for the present value of the amount designated to go to charity.

Plan for Tax Consequences

Tax Disadvantages of Charitable Remainder Trusts

• The property in the trust (the “trust corpus”) will be included in the donor’s gross estate and will be subject to estate tax.

Tip #7 - Consider Making a Video to Pass on Your

Values

Consider Making a Video

• Capture your stories, life lessons and family traditions in a video.

• What is a family tradition you love and how did it become a family tradition?• What is one piece of advice you

wish you had heard when you were younger?

• Tip #1 – Make sure your will is up to date.

• Tip #4 – Use trusts appropriately.

• Tip #7 – Consider making a video to pass on your values.

• Tip #5 – Be sure to choose the right guardians and

financial trustees.

• Tip #3 - Use the appropriate powers of attorney.

• Tip #2 – Have your will properly signed and witnessed.

• Tip #6 - Plan for taxes – estate, gift and other taxes.

Seven Tips for Protecting Your

Family and Assets

Robert V. BoeshaarAttorney at Law, LL.M., PLLCwww.boeshaarlaw.com (206) 623-0063

Questions?