The Truth About Estate Planning

The Truth About Estate Planning

Presented by Suzanne M. GravesAttorney and Counsellor At Law

Estate Planning Overview

Most Estate PlansJust Don’t Work!


Smokescreens

• Will vs. Trust• Avoid Probate• Hourly vs. Percentage Billing• Funded vs. Unfunded Trust


• Personalized Counselling• Proper Asset Ownership• Formal Review Process• Controlled Transfer Process

• What to Do• How to Do It• How to Pay for It

Keys to an Effective Estate Plan


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


Definition of Estate Planning

Give What I Have• To Whom I Want• When I Want• The Way I Want

All While Assuring My Wisdom is Transferred Along with My Wealth


The Planning Pyramid™

• Focuses on Client Goals

• Solutions Make Planning Easier

• Exposes Traditional Planning as “Upside Down”


Contrasting the Traditional and Truth Approaches

• The Debate Has Centered on Documents

• “It’s Not About Documents, It’s About RESULTS!”


TraditionalDocuments Used

Will Trust (Testamentary) Powers of Attorney

– Financial– Health Care

Living Will

Living Trust

Documents Used

Will (Pour-over) Trust (Living) Powers of Attorney

– Financial– Health Care

Living Will

Estate Planning OverviewComparison

Traditional vs. Approach

Client Care™


Client Care Process

Meet with Attorney to Develop Goals

Design Plan

Sign Plan

Fund Trust

Successor Training Workshops

Other Educational Workshops for Client

Annual Updating of Trust


Three Step Strategy™• DEVELOP Your Plan with Counselling Oriented Planning Partners• COMMIT Yourself and Your Family to a

Continuing Maintenance and Education

Program • SECURE Appropriate Assistance for You and Your Family to Transfer Your Wisdom along With Your Wealth


Three Types of Estate Plans

• Married Couple Under $2,000,000

• Married Couple Over $2,000,000

• Unmarried Individual


Personal Planning Goals

• Catastrophic Illness Protection• Remarriage Protection• Creditor Protection• Divorce Protection• Values Promotion

Counselling Oriented Planning Partners

How Do YOU Spell Counselling?

Counselling Oriented Attorney

Counselling vs. Word Processing

Counselling vs. Communication

Communication

No or Low Additional Cost

Plain English

Use of Stories






Three Types of Change An Estate Plan Faces

• Changes in Your Personal Situation

• Personal• Financial



• Changes in the Legal Environment

• Tax• Non-Tax (Personal Protections)



• Changes in Your Attorney’s Experience• Changes in Your OWN Experience

• Static vs. Continuous Improvement?

• Add Earned and Learned Wisdom!





“Appropriate Assistance”

Full Disclosure

Controlled Cost

True Peace of Mind

“Appropriate Assistance”

Are We The Ones?

• Age • Experience• Personality• Values

Controlled Cost

Successor Trustees Hire Assistance

Proactive Engagement Approach

Full Funding

Proactive Trustee (&Beneficiary) Training


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


“The Rest” of the Fees

• Trust Settlement Administration• Disability• Death

• Death Tax Return Preparation

• Probate Services

Estate Planning OverviewFees

Traditional Probate

– 2 to 3% “Standard” Living Trust Planning

– 1.5 to 2.5% Client Care Process™

– .5 to 1%

Without Counselling Approach• Reduced Initial Planning Options

• Outdated Plans Technical Personal

• Little Education For Yourself For Your Family


EVERYTHING IN ESTATE PLANNING COMES DOWN TO TITLE!

• Tax Savings

• Personal Protections• Catastrophic Illness Protection• Catastrophic Creditor Protection• Remarriage Protection• Divorce Protection


Three Types of Title

• Individual Name• Joint Name• Contract

• Beneficiary Designation• Trust


INDIVIDUAL NAME

equals

WILL

equals

PROBATE!

Estate Planning Options

• No Documents (Joint Tenancy)• Simple Will & Power of Attorney• Will with Testamentary Trust & Power of Attorney• Bare Bones Living Trust• Client Care Process™



Estate Planning Challenges

• Mental Disability

• Asset Transfer Upon Death

• Taxation

• Personal Planning Goals

Mental Disability Planning

Guardianship

• Loss of Control (to Judge)

• When I’m Disabled• Who Takes over Control (Guardian) • What the Guardian Can Do


Guardianship• Expensive

• Attorney’s Fees• Accounting Fees

• Time Consuming• Record-Keeping• Court Reports

• Public


General Durable Power of Attorney

• Blank Check

• Effective Immediately

• No Instructions

• No Reporting Requirements


Bare Bones Trusts

• Contain Standard Definitions of Disability and No Personal Instructions;

• Rely on General Durable Powers of Attorney; or

• Rely on Funding Only Power of Attorney


Client Care Process™

• Personalized Definition of Disability

• Private Transfer to Personally Selected Disability Trustees

• Personalized Disability Instructions


Planning for Retirement Plans

Contact Financial Institutions (or Human Resources) in advance

– Use their own power of attorney; or

– Get advance approval of your personalized document

Federal Estate Tax Reduction

Key Tax Savings Provisions

Unlimited Marital Deduction

$2,000,000 Exemption Equivalent


Trip to the IRS Supermarket


Property in The Supermarket Is Subject to Federal Estate Tax

Property out in The Parking Lot Is Not Subject to Federal Estate Tax


Family Trust

also called: B Trust Credit Shelter Trust By Pass Trust

FamilyTrust

Trustee Instructions:

Split Trusts Into Two Sub-Trusts

Family


Marital

Survivor May Be Trustee and Beneficiary of Both!



Transfer up to Exemption Equivalent to Family Trust, Put Any Excess in Marital Trust

Marital

Excess 1st $2,000,000(Today)

Family

Federal Estate Tax Reduction Marital Trust


Income to Spouse

Marital

Federal Estate Tax ReductionMarital Trust


Principal Full Control Full Use; Limited

Control on Death Full Use Marital

Federal Estate Tax ReturnFamily Trust


Income to Spouse Mandatory Discretionary

Family

Federal Estate Tax ReductionFamily Trust


Principal For “Needs” Health Education Maintenance Support

Family


The “Rule of 72”Dividing 72 by the rate of return on your investment roughly equals the number of years it takes to double

your account balance.


Effect of Growth

Excess

To LaterBeneficiaries But

Included in Survivor’s Estate

1st $2,000,000

8,000,000To Later Beneficiaries

WITHOUT Federal Estate Tax

FamilyMarital


Tax Savings Determined By:

Applicable Exclusion Amount

(Determined by Congress)

Funding of Family Trust


Available

Individual Name Assets Living Trust Assets Beneficiary Designations

Payable to Trust

Not Available

Joint Assets

Beneficiary Designations Payable to Individuals

Funding The Family Trust