1. What is Estate Planning?
4695 CHABOT DRIVE, SUITE 200 PLEASANTON, CA 94588
TEL: (925) FAX: (925)

2. Goals for Today
Find out which documents are included in an estate plan
Learn how all the documents work together
Learn how to use trusts to avoid probate
Learn how to use trusts to keep the court out of your family

3. What is Estate Planning?
Estate planning is the planning process of determining the distribution of your assets upon your death.
Planning also covers management of personal affairs in the event of incapacity.

4. What Estate Planning Does
Maintain Control Over Your Person & Affairs
Avoids Probate
Protects Your Children
Protects Assets from Lawsuits, Creditors, & Divorces
Protects Against
Administrative
Expense & Delay
Avoids Estate Taxes
Incapacity Planning

5. General Documents In Estate Plan
Pour Over Will
Revocable (Living) Trust
Advance Health Care Directive
Durable Power of Attorney for Property
Guardianship Documents for Minor Children

6. Pour Over Will States you are over 18 – age of capacity
States your understanding of what you have and who you want to give it to
Names beneficiaries
Specifies gifts
Names executor
Must go through Probate

7. Trust
Agreement between you as Trustee and Beneficiary during your lifetime, for your benefit now, and the benefit of beneficiaries later
Provides for distribution of funded assets
Avoids Probate Court
Can be used to avoid or minimize Estate Taxes

8. Advance Health Care Directive
Gives an agent ability to make health care decisions for you if you cannot because of incapacity or illness
Can ensure burial and other end of life decisions are carried out

9. Durable Power of Attorney
Gives an agent the ability to ensure your financial concerns are taken care of in the event of your incapacity
Avoids conservatorship

10. Other Estate Planning Documents and Their Use
Guardianship Nominations – document that names your designated guardian to care for minor children
Affidavit of Intent to Return Home – conforms to rules for Medi-Cal and reimbursement requirements

11. Your Planning Options
Will
Revocable Living Trust
Or Both?

12. Definition of a Will or Trust
Revocable
Living Trust
Will
Set of instructions to care for you and your family during your lifetime, in the event of incapacity, and at death - amendable
Set of instructions that take effect upon your death - amendable

13. Similarities of Wills and Trusts
Revocable
Living Trust
Will
Provides for distributing property at your death
Has no adverse lifetime income tax consequences
Provides for distributing property at your death
Has no adverse lifetime income tax consequences

14. Differences of Wills and Trusts
Revocable
Living Trust
Will
Are only effective at death
Must go through probate
Expensive
Long process for heirs
Probates are public
Are good only in state of residence
Are effective immediately
Avoids probate
Trusts are private
Are good in every state - portable

15. Property in My Living Trust
Will
Revocable
Living Trust
My Property
Property in My Living Trust No
Probate
Probate
Heirs
Heirs

16. Why Use Both?
Funding of Assets
Will Estate
Trust Estate

17. And you forget to put the house back in trust
Why Use Both?
What if…
Will Estate
Trust Estate
Refinance your house
And you forget to put the house back in trust
And you die

18. Judge grants an order to return back to trust
Why Use Both?
What if…
Will Estate
Trust Estate
Transferred to
Will Estate
Judge grants an order to return back to trust

19. Judge grants an order to return back to trust
Why Use Both?
What if…
Will Estate
Trust Estate
Judge grants an order to return back to trust

20. What is Probate?
Probate is the first step in the legal process of administering the estate of a deceased person, resolving all claims and distributing the deceased person's property under a will.
Court decides the legal validity of a deceased person’s will and appoints the executor.
Probate Court then distributes assets.
If there is no will, it is called an intestacy probate.

21. What is the Cost of Probate?
Gross Asset Value of Entire Estate
Minimum Statutory Probate Fees
$400,000
$500,000
$750,000
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$22,000*
$26,000*
$36,000*
$46,000*
$66,000*
$86,000*
$106,000*
*Fee is 0 if asset is in trust

22. Why People Avoid Getting an Estate Plan?
Cost
Think their estate is too small to support the expense of planning
Want to initiate probate proceedings at death
Superstitious

23. What if You Do Nothing? At Incapacity: Guardianship/Conservatorship
Court controls assets
Brain dead on life support
At Death:
Court proceeding to determine who will be guardian for minor children
Assets distributed according to state law through probate - intestacy
Failure to do advanced planning for larger estates:
Family money goes to taxes instead of heirs – estate tax risk
Kids blow inheritance
Control issues and fighting among family members left behind

24. Who Needs a Trust? “Everybody!”
Any individual with real property (home, land)– regardless of state
Any individual with assets valued at over $150,000 - gross
Those individuals that wish to spare their beneficiaries the burden and cost of probate
Those individuals who have specific distribution desires post death
Individuals with large estate tax risk

25. What is Estate Tax? Two Fundamental Rules
Unlimited Marital Deduction
ANY amounts passing to a spouse (or a qualifying trust for spouse) avoid estate taxes on the first death.
The tax, if any, is assessed upon the death of the surviving spouse.
Applicable Exclusion (Coupon) Amount
The dollar value of assets that one can leave to non spouse beneficiaries without incurring any estate taxes.

26. PRESENTED BY: UNCLE SAM
Estate Tax Coupon
For
$5,250,000
This coupon allows you to leave assets and wealth, up to the face amount of the coupon, to someone besides your spouse, free of estate taxes. This coupon is non-transferable and must be redeemed at the time of your death.

27. How to Preserve over a $10,000,000 Estate Tax Free for your Heirs?
Use a Family Trust!
Let’s use our IRS “Coupon” -
The Applicable Exclusion Amount

28. How to Waste Your Estate Tax “Coupon”? No Trust
Husband Wife Total
Assets: $5,250, $5,250,000 = $10,500,000
Husband dies, leaves all to wife.
HUSBAND
WIFE
$5,250,000
$5,250,000
+ $5,250,000
$10,500,000
Less One Coupon $5,250,000
Tax Cost: $2,100,000 (40% tax rate)

29. How NOT to Waste Your Estate Tax “Coupon” Using a Trust
HUSBAND
WIFE
Husband dies & $5,250,000 of Assets
go to Family Trust
Income and other benefits to wife for her lifetime
WIFE
Assets in estate $5,250,000
Less Wife’s coupon - 5,250,000
Tax = 0
To Children at
Wife’s Death

30. What is the ESTATE TAX “Coupon” Rate NOW?
$5,000,000 Coupon Amount
$5,125,000 Coupon Amount
$5,250,000 Coupon Amount $?
Remember that the top tax rate is 40% so your heirs potentially can lose almost half of every dollar that you do not specifically protect through trust planning

31. Does this Apply to Me? Assets Included in Definition of “Estate”
Real Property in any state
Life Insurance Policies
Checking, Savings, Annuity or other Liquid Accounts
Business Interests – Sole Proprietor/Corp/LLC/Partnership
Retirement and Pension Plans
All Personal Property

32. Real Life Examples
Amy Winehouse – 27 year old singer with $5mm estate with no will – everything went to her parents – left out siblings (which was her expressed desire)
Terry Schiavo – no planning led to her being on life support for over 13 years
Leona Helmsley – put only $12 mm in trust for dog “Trouble,” rest of her billions had to be probated
J.S. – died in the middle of divorce with kids, estate left to husband
K.P. – no will so estate left to wife and two kids, although kids were already provided for before death
Bus Story

33. 4695 CHABOT DRIVE, SUITE 200 PLEASANTON, CA 94588
Questions?
4695 CHABOT DRIVE, SUITE 200 PLEASANTON, CA 94588
TEL: (925) FAX: (925)