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Estate Planning © 1996-2004, FET. This presentation has been prepared to provide a general overview of Estate Planning. The authors of this presentation.

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Presentation on theme: "Estate Planning © 1996-2004, FET. This presentation has been prepared to provide a general overview of Estate Planning. The authors of this presentation."— Presentation transcript:

1 Estate Planning © , FET

2 This presentation has been prepared to provide a general overview of Estate Planning. The authors of this presentation have made every effort to verify the accuracy of the information therein. This presentation is not intended to give legal or tax advice. As the laws which relate to Estate Planning are subject to change, the viewer is advised to seek professional assistance in the design or implementation of any Estate Plan. This presentation is copyrighted. Duplication of the material in whole or in part is a violation of copyright and is expressly prohibited. All rights reserved. ©, First Estate Trust © , FET

3 Estate Planning n What is Estate Planning n The 3 Areas of Estate Planning n The Problem With Probate n The Last Will and Testament n Joint Ownership of Property n The Revocable Living Trust n The Life Cycle of A Trust n Why a Trust is Not Enough n Multi-Trust Strategies n What the Experts Say © , FET

4 What is Estate Planning? n Estate Planning: A systematic method of accumulating assets during your lifetime, preserving these assets from loss or premature distribution, and properly transferring them to your heirs at death. © , FET

5 3 Areas of Estate Planning n Creation n Conservation n Distribution © , FET

6 n Creation 3 Areas of Estate Planning Developing a Sound Financial Plan for Accumulating Assets During Your Lifetime... Buying A Home Buying A Home Creating A College Fund Creating A College Fund Planning for Retirement Planning for Retirement Other Financial Goals Other Financial Goals © , FET

7 Income Taxes Income Taxes Inflation Inflation Health Concerns Health Concerns 3 Areas of Estate Planning n Conservation Maximizing Your Retirement Income While Avoiding the Pitfalls of... © , FET

8 3 Areas of Estate Planning n Distribution Developing a Systematic Plan to Transfer Your Assets to Your Heirs: Quickly Quickly Easily Easily Inexpensively Inexpensively Without Conflict Without Conflict © , FET

9 You Work ALL Your Life to Build an Estate... The Need for Estate Planning © , FET

10 But Without Proper Planning, You and Your Heirs May Not Enjoy the Benefits of Your Estate... The Need for Estate Planning © , FET

11 The Need for Estate Planning n Financial Burdens Long Term Care Probate Fees Death Taxes Liquidity Cash Flow n Transfer of Assets Conservatorship Probate Delays Guardianship Asset Management © , FET

12 The Problem With Probate n Probate: The legal process following your death through which your debts are paid and your property is distributed. Probate is also the legal process by which one obtains clear title to an inherited asset. © , FET

13 The Problem With Probate n Probate: The legal process responsible for managing both the personal and financial affairs of persons who are incapacitated or minors under the law... © , FET

14 The Problem With Probate n Probate Happens When 3 Events Occur n Property Owner Becomes Incapacitated n Property Owner Dies n Minor Inherits Property © , FET

15 Probate Can Occur Several Times During Your Lifetime... The Problem With Probate © , FET

16 The Probate Process Will is Read Assets Assembled, Safeguarded, Inventoried, and Notices Given Court Petitioned to Start Probate Executor Appointed by Court Cash Needs Reviewed Claims Reviewed Taxes Prepared Income Taxes Paid Debts Satisfied Estate Taxes Paid Notice Given to Public Attorney Fees Paid Court Fees Paid Distribute Remaining Assets Close Probate File © , FET

17 The Costs of Probate n MONEY Average 5-10% of Gross Estate Value (More if Contested) All Costs of Probate Paid by Estate Assets n TIME Probate Can Take 6 Months to 3 Years to Complete (Longer if Contested) n PRIVACY All Your Personal and Business Affairs Become PUBLIC RECORD. Anyone Can Access Your Records Through the Courts © , FET

18 The Costs of Probate n LOSS OF CONTROL The Court Makes the Final Decisions Regarding the Ultimate Distribution of Your Assets to Your Heirs n OTHER CONCERNS The Court Decides Who will Raise Your Children and Must Approve Any and All Expenditures on Their Behalf Your Children Inherit Their Share of the Estate at Majority Age, Often at a Time When They Lack Maturity to Manage Money Prudently © , FET

19 Your Will Could Be Contested and Your Heirs Receive Little... or Nothing...and Only After Probate is Completed The Costs of Probate © , FET

20 The Last Will and Testament n Will: A directive to express your wishes to the Court regarding the distribution of your assets at death. A WILL is a ONE-WAY TICKET to PROBATE Must Be Probated to be Enforceable Must Be Probated to be Enforceable Becomes Part of Public Record Becomes Part of Public Record Easily Contested in Court Easily Contested in Court Only Valid at Death Only Valid at Death © , FET

21 Although it is one of the LEAST Expensive Planning Methods to Create... It is One of the MOST Costly Methods to Use... The Last Will and Testament © , FET

22 Joint Ownership of Property The registration of assets to show common ownership by two or more parties, typically a husband and wife. This is a common method of Estate Planning. n Joint Tenancy: The registration of assets to show common ownership by two or more parties, typically a husband and wife. This is a common method of Estate Planning. © , FET

23 Problems With Joint Ownership n Delays Probate...Doesn’t Avoid It Upon First Death, ALL Property Passes to Surviving Spouse Without Probate Costs. However, BEFORE Assets Can Pass to the Children, the Estate Must be Probated. © , FET

24 Problems With Joint Ownership n Naming Children As Joint Tenants Could unknowingly impose a Gift Tax Liability (37-55%) to Your Children Capital Gains Tax (20-28%) Could Be Imposed at Time of Sale Exposes Your Assets to Creditors of Children in the Event of a Lawsuit Joint Tenants Have UNLIMITED Access to Assets Jointly Held © , FET

25 Problems With Joint Ownership Regardless of What Your Will or Trust Specifies, ANY Jointly Held Property Goes to the Surviving Joint Owner at Your Death © , FET

26 Avoiding Probate... The Revocable Living Trust © , FET

27 The Living Trust Alternative n Revocable Inter Vivos Trust: A Living Trust is a legal document that allows YOU to transfer ownership of titled and personal property from individual ownership to a trust which YOU control. Separate Legal Entity, Similar to a Corporation Separate Legal Entity, Similar to a Corporation Have Been in Existence for Hundreds of Years Have Been in Existence for Hundreds of Years Provides LIVING BENEFITS For You & Your Family Provides LIVING BENEFITS For You & Your Family Allows YOU to RETAIN CONTROL of Your Assets Allows YOU to RETAIN CONTROL of Your Assets © , FET

28 The Living Trust Alternative After All, YOU Built Your Estate... Who Takes Better Care of It Than You? © , FET

29 Advantages of a Living Trust n AVOID PROBATE You Own NO Assets to Pass Through Probate, so You Avoid All the Related Delays and Court Costs of Probate n RETAIN CONTROL OF ESTATE Your SPECIFIC Instructions are Outlined in Your Trust and Are Followed in the Event of Your Incapacity or Death by Your Successor (Back-Up) Trustees In the Event of a Physical or Mental Incapacity, Your Trust Prevents a Conservatorship © , FET

30 n PROTECTS SPECIAL NEEDS AND MINOR CHILDREN A Children’s Trust Can Provide Funds to Meet the Future Needs of Your Children. Your Appointed Guardian and Trustee Can Act in Your Behalf Without Any Interference From the Courts Funds are Distributed as YOU Direct to Protect Children with Special Physical, Mental, or Emotional Needs Your Children DO NOT Inherit Your Estate Until You Say So Advantages of a Living Trust © , FET

31 n FAMILY AFFAIRS ARE PROTECTED Trust Records are CONFIDENTIAL, so Your Personal and Financial Privacy is Assured Living Trusts Prevent Unintentional Disinheriting and Can Provide A Pre-Nuptial Protection of Assets Living Trusts Are Difficult to Contest Living Trusts Allow for Quick Distribution of Your Estate to Your Beneficiaries Advantages of a Living Trust © , FET

32 n FLEXIBILITY A Living Trust Can Be Changed, Amended or Revoked at Any Time n REDUCE OR ELIMINATE ESTATE TAXES Use of an A-B Trust Allows You to Pass Up to $3 Million Estate Tax Free Advantages of a Living Trust © , FET

33 The Life Cycle of a Living Trust Trustor(s) Create & Fund Living Trust Trustee(s) Manage Living Trust Assets Back-Up Trustee Manage Assets in Event of Disability or Death Beneficiaries Receive Assets in Trust at Your Death © , FET

34 Why a Trust is Not Enough... n To Provide a Comprehensive Estate Plan for YOU and Your Family, Other Documents Should Be Included To Enhance the Protection Provided By A Revocable Living Trust... Pour Over Will Pour Over Will Durable Power of Attorney Durable Power of Attorney Health Care Power of Attorney Health Care Power of Attorney Nomination of Conservator Nomination of Conservator Living Will Living Will © , FET

35 Supporting Documents n POUR OVER WILL: This Document Insures Any Assets Overlooked or Intentionally Left Out of Your Trust Are “Poured Over” Into Your Trust At Your Death For Final Distribution n DURABLE POWER OF ATTORNEY: This Document Appoints an Agent to Step In and Manage Your Financial Affairs in the Event of An Incapacity. This Can Prevent a Court Imposed Conservatorship © , FET

36 Supporting Documents n HEALTH CARE POWER OF ATTORNEY: This Document Gives the Person You Appoint the Power to Make Prompt Medical Decisions For You in the Event You are Unable to Make These Decisions Yourself n NOMINATION OF CONSERVATOR: In the Event of Disability or Incapacity, This Document Can Prevent a Court Ordered Conservatorship. You May Appoint Someone To Step In and Manage Your PersonalAffairs © , FET

37 Supporting Documents n LIVING WILL: This Document Declares Your Intent Regarding the Use of Artificial Life Support to Prolong the Dying Process When There is NO Chance of Recovery REMEMBER... A Comprehensive Estate Plan Preserves Assets So They Can Be Properly Transferred to the Beneficiaries Quickly, Easily, Inexpensively, and Without Court Intervention © , FET

38 Multi-Trust Strategies n Long Term Care: Defines a Variety of Services in the Area of Health, Personal Care, and Social Needs of Persons Who are Chronically Ill or Infirmed. A National NAIC Study Predicts That 50% of All Americans Age 65 and Over Will Be Admitted to a Nursing Facility in Their Lifetime A National NAIC Study Predicts That 50% of All Americans Age 65 and Over Will Be Admitted to a Nursing Facility in Their Lifetime Medicare Pays for ONLY 2% of All Nursing Facility Care...and NOTHING Beyond 100 Days Medicare Pays for ONLY 2% of All Nursing Facility Care...and NOTHING Beyond 100 Days The Average Stay in A Nursing Home is 2-1/2 Years at an average cost of $54,000 annually. The Average Stay in A Nursing Home is 2-1/2 Years at an average cost of $54,000 annually. Medicaid Pays ONLY After Personal Assets Are “Spent Down”Medicaid Pays ONLY After Personal Assets Are “Spent Down” © , FET

39 Multi-Trust Strategies n How Do You Pay For Long Term Care: n PAY YOUR OWN WAY n Cash (Savings, Sell Assets, etc...) n LTC Insurance n Annuities n Cash Value Life Insurance n DEPEND ON GOVERNMENT n Medicaid (State - Must Qualify) n Medicare (National – Must Qualify) © , FET

40 n Multi-Trust Planning: Provides for the Division of Assets into Various Trust Arrangements to Provide Protection from Premature Loss or Excessive Tax Liabilities Distribution of Assets into Multiple Trusts Provides a Significant Degree of Protection in the Event of a Lawsuit. Only Those Assets Within the Trust Specified in the Suit Can Be Attached. Distribution of Assets into Multiple Trusts Provides a Significant Degree of Protection in the Event of a Lawsuit. Only Those Assets Within the Trust Specified in the Suit Can Be Attached. Assets placed in Irrevocable Trust Arrangements can Shelter Assets, Improve Your Tax Situation, Benefit a Charity, and Assure Your Beneficiaires Receive the Assets As You Intended Assets placed in Irrevocable Trust Arrangements can Shelter Assets, Improve Your Tax Situation, Benefit a Charity, and Assure Your Beneficiaires Receive the Assets As You Intended Multi-Trust Strategies © , FET

41 Multi-Trust Strategies n Dynasty Trusts: A Generational Trust Arrangement Whereby multiple generations can be recipients of trust proceeds. n The idea behind the Dynasty Trust is to provide for the needs of the generations that will follow without removing the work ethic from their lives. n Proceeds are distributed based on specific “life events” as defined in the Trust Corpus. © , FET

42 Multi-Trust Strategies A Properly Designed Estate Plan Addresses Long Term Care Concerns and Protects Your Assets From Premature Distribution... © , FET

43 What The Experts Say... “Probate...is essentially a form of private taxation levied by the legal profession upon the rest of the population.” Norman Dacey, Author How to Avoid Probate Norman Dacey, Author How to Avoid Probate “Probate is costly, slow, and outmoded... a sad state of affairs.” A Report of Probate, 1990 AARP Study “Put not your trust in money, but put your money in trust. Oliver Wendall Holmes © , FET

44 A Final Word... Estate Plan I, John Q. Public, being of sound mind and body, do declare this to be ma Estate Plan... A Properly Designed Estate Plan Allows YOU to Do One Thing... © , FET

45 Estate Planning You Can Spend More of Your Life LIVING...and Enjoying It! © , FET

46 For More Information... To Find Out How to Implement These Strategies in a Personal Estate Plan... Contact the Representative Who Provided You With This Presentation, or Our Office for a Representative in Your Area: First Estate Trust Post Office Box 640 Russellville, AR © , FET (479) or (800)


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