1. Presented by: Daniela Lungu Attorney at Law
Estate Planning 101
Presented by:
Daniela Lungu
Attorney at Law

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

3. What Estate Planning Does
Maintain Control Over Your Person & Affairs
Reduce Income
Taxes
Protect your children
Protect Your Assets from Lawsuits
Creditors, and Divorces
Protect Against
Administrative
Expense & Delay
Save Estate Taxes
Save Gift Taxes
Incapacity Planning

4. Why People Avoid Getting an Estate Plan?
Cost
Fear
Lack of understanding of benefits of EP
Want to initiate probate proceedings at death
Think their estate is too small to support the expense of planning

5. General Documents In Estate Plan
Pour Over Will
Includes beneficiaries, guardianship nominations, gifts, named executor
Revocable (Living) Trust
contract for distribution of funded assets
Advance Health Care Directive
Durable Power of Attorney for Property

6. Your Planning Options Will or Revocable Living Trust
General Durable Power of Attorney
Advance Health Care Directive

7. 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 - intestacy
Failure to do advanced planning for larger estates:
Family money goes to taxes instead of heirs
Kids blow inheritance
Control issues and fighting among family members left behind

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

9. WILL REVOCABLE LIVING TRUST
My Property
Property in My Living Trust
Probate
(No Probate)
Heirs
Heirs

10. Comparison of Wills and Trusts
Revocable Living Trusts
SIMILARITIES
Provides for distributing Provides for distributing
property at your death property at your death
Can be used to plan for Can be used to plan for
death tax death tax
Has no adverse lifetime Has no adverse lifetime
income tax consequences income tax consequences

11. Comparison of Wills and Trusts
Revocable Living Trusts
DIFFERENCES
Are only effective at death Are effective immediately
Must go through probate Avoid probate
10-30% gross loss of estate
Long process for heirs
Are public Offer privacy
Are not viable interstate Are good in every state planning tools
General power of attorney to Incapacity Trustee has
address incapacity legal title and makes decisions directed by you

12. Who Needs a Trust? “Everybody!”
Typically any individual with real property
Any individual with assets valued at over $200,000
Those individuals that wish to spare their beneficiaries the burden and cost of probate
Those individuals who have specific distribution desires post death

13. 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 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.

14. Presented By: Uncle Sam
Estate Tax Coupon
For
$2,000,000*
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.
*Increasing to $3.5MM in 2009.

15. How to Preserve $4,000,000 Estate
Tax Free for your Heirs??
Use a Family Trust!
Let’s use our IRS “Coupon” -
The Applicable Exclusion Amount!

16. How to Waste Your Estate Tax “Coupon”??
Husband Wife Total
Assets: $2,000, $2,000,000 =$4,000,000
Husband dies, leaves all to wife.
Wife
Husband
$2,000, $2,000,000
$2,000,000
$4,000,000
Less One Coupon $2,000,000
Tax Cost: $900,000

17. How NOT to Waste Your Estate Tax “Coupon”
Wife
Husband
Income and other benefits to wife for her lifetime
$2,000,000 of Property to Family trust
Wife
Assets in estate $2,000,000
Less Wife’s coupon $2,000,000
Tax = 0
To Children at Wife’s Death

18. Does this Apply to Me? Assets Included in Definition of Estate
Real Property
Life Insurance Policies
Checking, Savings, Annuity or other Liquid Accounts
Business Interests
Retirement and Pension Plans
All Personal Property

19. Other Estate Planning Documents and Their Use
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
Durable Power of Attorney – gives an agent the ability to ensure your financial concerns are taken care of in the event of your incapacity

20. Real Life Examples Elvis – estate lost $10 million due to no planning
James Brown – heirs still fighting over estate because he had no trust; no advance health care directive cause burial to be delayed
Anna Nicole Smith – burial delayed due to no planning; died with will only so probate
Terry Schiavo – no planning led to her being on life support for over 13 years
Leona Helmsley – put only 12 mil in trust for dog Trouble, rest of her billions have to be probated

21. Daniela Lungu, Attorney at Law Estates and Trusts
Questions?
Daniela Lungu, Attorney at Law Estates and Trusts
and Business Planning
(510)