1. Objective 9 Be aware of the basic documents used in Estate Planning 91
Scope and characteristics of personal financial planning
Understand “Cash Flow”
Know how to prepare an initial Personal Budget Estimate
Know how to track Monthly Income, Taxes, LES & Other Income
Deductions, Loan & Credit Balance Payments, and Monthly Living
Expenses
Know how much Savings you need to set conditions for informed
Investing
Be familiar with Risk Management a.k.a Insurance
Understand the role of Credit and performance as a borrower
Be aware of the “Magic of Compound Interest” Rates of Return
. . . financial objectives Financial Independence
. . . “Set Conditions” for Future Classes on “Investments & Investing” 2 3 4 5 6 7 8 9
Be aware of the basic documents used in Estate Planning

2. You get . . . . . . before you’ve spent it ALL ?!?
What Happens If . . .
You get . . .
Hit by Lightning
Above Grass
Below Grass
. . . before you’ve spent
it ALL ?!?

3. Basic Documents Used in Estate Planning
Wills
Side Letters of Instruction
Powers of attorney for Property
Durable Powers of Attorney for Health Care
Living Wills or Advanced Medical Directives
Do Not Resuscitate Orders
Trusts & Other Wealth Transfer Devices
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN

4. Time Related to Estate Planning Documents
Hit by Lightning
Above Grass
Below Grass
Will
Power of Attorney
Trust
Living/Inter Vivos
Testamentary X
Executor / Administrator
Agent / Attorney-in-fact
Ends at Death or Revocation
Trustee
Trustee / Successor Trustee
Protects a minor
Handicapped child
Financially inexperienced spouse
Spendthrift
Date Document
Signed, Witnessed,
& Notarized
Signed; Effective at Death
Signed; In Effect

5. Intestate ~ Testate
To die “intestate” is to die without a valid will or to die
with a will which does not dispose of all property.
A decedent who has a valid will is said to die “testate.”
Intestacy can occur because . . .
A will was not written, or
the will fails to dispose of some property, or because
the will is invalid.
. . . but don’t worry if you die intestate, the State will
distribute your property to your heirs under the State
Intestate Succession Law.
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN

6. Extracts from a Sample State Intestate Succession Law
Revise
Surviving spouse
Entire estate if not survived by “issue” children
If “issue,” spouse get 1st $50,000 plus one half remaining
Of the remaining, or the entire estate, if no issue . . .
Decedent’s “issue”, taking by representation (per stirpes)
Decedent’s parent or parents equally
Issue of decedent's parents, taking by representation
. . . and more to follow

7. Will ~ Power of Attorney ~ Trust
a legal document that provides the testator, or will
maker, the opportunity to control the distribution of
property, appoint an executor, and avoid the state’s
intestacy law distribution scheme.
Power of Attorney
a legal document that authorizes an agent to act on
a principal’s behalf.
Trust
a structure that vests legal title (the legal interest) to
assets in one party, the trustee, who manages those
assets for the benefit of the beneficiaries (who hold the
equitable title) of the trust.
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN

8. Tell Me About Trusts & Probate Again ?
Revise
Tell Me About Trusts & Probate Again ?
Life Insurance
Annuities
POD Accounts
TOD Accounts
Qual Rtmt Plans
IRAs / SEPs
Contracts with
Named Beneficiaries
Property Titled with
Survivorship Features
Property Already Titled
into Trusts
All Other
Property
Transfers to Named
Beneficiary via
State Contract Law
Transfers to Survivors
via State Titling Law
Transfers According to
Your Trust Provisions via
State Trust Law
Transfers to Legatees
and Heirs via
Probate
JTWROS
Tenancy by the
Entirety
Home?
Bank/Credit Union
Accounts?
Investments?
To Probate
for Retitling
Testate (Will) &
Intestate Assets
3 Panel
Credit
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN

9. Structure of a Trust Grantor Trustee Beneficiaries Corpus ≈ Principal
Transfers
Assets
Trustee
Income
Corpus
Beneficiaries
Trustee takes legal title
to trust assets and
manages the assets
for the benefit of
the beneficiaries,
eventually paying out
income and corpus
to beneficiaries
Income beneficiaries
receive income during
the term of the trust
Remainder
beneficiaries receive
corpus upon
termination of the trust
Corpus ≈ Principal

10. Types & Uses of Trusts Living Trust (Revocable)
Used to manage assets. Protects in emergencies,
such as medical. Avoids publicity and probate.
Property is included in the gross estate of the grantor.
Irrevocable Trust
(Inter Vivos)
Used to make gifts. Grantor relinquishes control of
assets. Assets not included in gross estate of grantor.
Testamentary
Trust
Created by the will. Property is included in the gross
estate and does not avoid probate. Used to manage
assets of heirs.
Trust for Minors
Manages assets for minors. May shift income tax
burden to lower-bracket taxpayer.
Irrevocable Life
Insurance
Trust (ILIT)
Irrevocable. Usually created during lifetime, used to
hold an insurance policy, and thus remove the proceeds
from the insured’s gross estate. Usually provides
income to the spouse, and corpus to children.

11. The Unified Gift and Estate Transfer Tax System
“Application” Trusts used to reduce “transfer” taxes stemming from . . .
The Unified Gift and Estate Transfer Tax System
Credit Equivalency Trust (B Trust – B stands for “bypassing the spouses
estate”
2007
Estate & GST
Deathtime Transfer
Exemption
$2 Million
Power of Appointment Trust (POA)
Qualified Terminal Interest Property Trust
Charitable Remainder Trust (CRTs)
2007
Highest Estate &
Gift Tax Rates
45%
Charitable Lead Trust (CLTs)

12. Estate Planning . . . The process of accumulating, managing,
conserving, and transferring family wealth . . .
considering legal, tax, and personal objectives
. . . It’s financial planning in anticipation of your
tragic and untimely demise.
Goal: the efficient and effective transfer of assets
. . . effective: to the person or institution intended
. . . efficient: minimum transfer costs
[ in terms of estate and gift taxes ]
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN

13. Living & Testamentary Trusts
Revocable Living Trust
Living & Testamentary Trusts
a revocable trust that is managed by the grantor and is for the benefit of the grantor during his lifetime. The property transferred to the trust avoids the individual’s probate estate but is included in the individual’s gross estate.
Revocable Trust
a trust created where the grantor of the trust retains the right to revoke the trust at any time prior to his incapacity or death.
Irrevocable Trust used for Estate & Gift Tax Planning
trust created by a grantor that cannot be revoked. The grantor
cannot take back property that was transferred to the trust.
For this reason, the property is excluded from his gross estate
Testamentary Trust
A trust created at the death of the grantor. The grantor’s will generally includes all trust provisions.
From: “Estate Planning for Financial Planners,” Michael A. Dalton & Thomas P. Langdon, Money Education TM, 3d Ed, 2004; ISBN