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Ensure peace of mind with a comprehensive Family Protection Plan.

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Presentation on theme: "Ensure peace of mind with a comprehensive Family Protection Plan."— Presentation transcript:

1 Ensure peace of mind with a comprehensive Family Protection Plan.

2 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

3 What is a Family 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.

4 Your Estate Home Retirement accounts Life insurance Bank accounts Automobiles Investments Business interests

5 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

6 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.

7 Depending on your situation, you may need a:

8 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

9 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.

10 Tip #1 – Make sure your will is current.

11 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.

12 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 Current Reasons to Have a Will

13 Make Sure Your Will is Current Reasons 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.

14 3)To give an item of intrinsic value to the person you know would most appreciate it. Make Sure Your Will is Current Reasons to Have a Will Photography equipment Examples: A music collection A painting An expensive bicycle Jewelry

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

16 Make Sure Your Will is Properly 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 testators request.

17 Make Sure Your Will is Properly Signed and Witnessed A will is valid in Washington State if: Out-of-State Wills It is signed in the manner required by the state of the testators home, At the time it is signed or at the time of the testators death. It is signed in the manner required by the state in which it is signed, or

18 Tip #3 – Have the Proper Powers of Attorney in Your Plan Financial Power of Attorney Durable Power of Attorney for Health Care Advance Health Care Directive

19 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.

20 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

21 Tip #4 – Use Trusts Appropriately as part of your Family Protection Plan

22 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.

23 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.

24 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

25 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.

26 Use Trusts Appropriately Consider your own financial needs during your lifetime Considerations for a Childrens Trust May want to postpone bequest until child reaches a certain age or ages Consider the maturity of the beneficiaries

27 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.

28 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 pets care. Pet Trust

29 Tip #5 – Be sure to choose the right guardians and financial trustees.

30 Choose the Right Guardians/Trustees Minor children Separate financial trustee & guardian Consider persons skills & expertise Personal qualities of potential guardian or trustee Contingencies Incapacity or death of named guardian Divorce of named guardian Things to Consider

31 Choose the Right Guardians/Trustees Understands the beneficiarys needs Qualities for a Guardian or Trustee Makes good, well-informed, decisions Able to manage own finances Similar values Relationship with you/your beneficiary

32 Tip #6 - Plan for Estate & Gift and Other Tax Consequences Consider: Capital gains Generation-Skipping Tax Lifetime gifts Washington State and federal taxes The use of family limited partnerships

33 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

34 Gross Estate – Debt + Insurance = Taxable Estate How is the Federal Estate Tax Calculated? Plan for Tax Consequences

35 Federal Estate Tax Rates YearExemption AmountTop Tax Rate 2005$1,500,00047% 2006$2,000,00046% 2007$2,000,00045% 2008$2,000,00045% 2009$3,500,00045% 2010$5,000,00035% 2011$5,000,00035% 2012$5,120,00035% 2013$5,250,00040%

36 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 spouses 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.

37 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

38 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 decedents 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.

39 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

40 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.

41 Plan for Tax Consequences Tax Disadvantages of Charitable Remainder Trusts The property in the trust (the trust corpus) will be included in the donors gross estate and will be subject to estate tax.

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

43 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?

44 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

45 Robert V. Boeshaar Attorney at Law, LL.M., PLLC (206) Questions?


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