Well, I’ll Get Around to it...

WHO NEEDS AN ESTATE PLAN? EVERYONE!

PURPOSE OF PLANNING  Lifetime issues  Family issues  Wealth protection  Tax avoidance

WHAT DOES AN ESTATE PLAN INCLUDE?  Will  Statement of Disposition of Tangible Personal Property  Revocable Trust  Life Insurance/ Irrevocable Trust  Durable General Power of Attorney  Durable Health Care Power of Attorney  Organ Donation / Cremation and Funeral Instructions  Beneficiary Designations  Re-titling of Assets

WHERE THERE IS NO WILL  No named beneficiaries  No named guardian  No named personal representative  No testamentary trust

THE WILL  The will is the instrument that directs how your assets are to be distributed after your death.  Personal representatives  Q-tip trust  Family trust

GUARDIANS For people with minor children, this is the most important reason for establishing an estate plan.

REVOCABLE OR “LIVING TRUST”  Trust Agreement  Pour-Over Will

WILL VS. REVOCABLE TRUST  Tax planning  Organize now or later  Administration

BENEFICIARIES  THIS IS A BIG ISSUE  Children  Charities  Other family members

IF YOU HAVE A REVOCABLE TRUST... Is it funded?

GENERAL DURABLE POWER OF ATTORNEY  This document handles your financial matters.  Date of Document  When does it become effective

GENERAL DURABLE HEALTH CARE POWER OF ATTORNEY  You appoint someone to make health care decisions for you when you are unable  Includes the “living will”  Cremation/burial instruction

STATEMENT OF DISPOSITION OF TANGIBLE PERSONAL PROPERTY

BENEFICIARY DESIGNATIONS  Properly designating beneficiaries of Retirement Plans at death is an important part of the estate planning process  For many, this is the largest asset  Children as beneficiaries

LIFE INSURANCE  Liquidity – taxes, succession planning  Creating estates  Replace income  A lot of insurance  Not enough insurance

IRREVOCABLE TRUSTS for Life Insurance

TITLING OF ASSETS  TENANTS IN COMMON  JOINT TENANTS

BENEFICIARY DESIGNATIONS  IRAs  LIFE INSURANCE  401(k)s

WHAT IS A PROBATE? The purpose of probate is to transfer assets and deal with the creditors of the decedent.

DIVORCE Ownership of real property by a husband and a wife as joint tenants changes to ownership as tenants in common if the couple is divorced. After a divorce if one marriage partner dies before changing the title to the property, the decedent’s interest in the property automatically passes to his or her heirs rather than to the former spouse.

DIVORCE (continued)  A divorce terminates the right of a former spouse to inherit under the will.  A divorce or dissolution of marriage revokes bequests and devises to a former spouse – but not the will itself.  A divorce revokes the appointment of the former spouse as an executor or trustee under the will.  Watch out for insurance beneficiaries!

MINOR CHILDREN  Appointment of a guardian  Establishment of a trust – minor children cannot inherit outright

DISABLED CHILD Supplemental Needs Trust

THE FIRST RULE IN ESTATE TAX PLANNING: Fully utilize the Unified Credit

UNIFIED CREDIT 2014$5,250,000

ENTITY CHOICES…

LIMITING LIABILITY  Entity Choice  Liability insurance

ENTITIES THAT LIMIT LIABILITY  Corporations  Limited Liability Companies

LIABILITY INSURANCE Look at your umbrella Pays for the lawyer

FACTORS TO CONSIDER IN CHOOSING ENTITY TYPE  Tax considerations  Operational flexibility/compliance  Ease of liquidity  Future fundings

C CORPORATIONS annual compliance double taxation most familiarity

S CORP special election flow through limited to 75 shareholders/ US residents Tax liability even if no cash from corp.

LLCs Flow through fewer formalities/operational flexibility operating agreement managers transfer of appreciable assets to members

FOR MORE INFORMATION REGARDING PLANNING, CONTACT: Cristy J. Carbón-Gaul