Truth About Estate Planning

Law Offices Of Arthur J. Pauly, Jr.

What You Should KnowBefore You See An Attorney

Proper Estate Planning

Caring for loved ones as if you were still there

• With your resources

• With your love

• With your wisdom

The Estate Planning Process

• Education• Design

• Drafting Documents

• Implementation

• Control my property while I’m alive and well;

• Plan for me and my loved ones if I become disabled

• Give what I have

–To who I want

–The way I want

–When I want

Estate Planning Defined

Common Planning Techniques

• Owning property jointly

• Designating a beneficiary

• Signing a will

Traditional Estate Planning

Gross Estate

Your Will

Non-probate transfers

Jointly owned propertyLife InsuranceIRA’s401(k)’sAnnuities

Planned Distributions

Property titled in your name

ProbateProcess

Wills Can Fall Short of Estate Planning Goals

• Won’t provide for your disability

• Won’t necessarily give what you have:

– to whom you want

– the way you want

– when you want

• Certainly won’t avoid probate

Last Will of Jackie K. Onassis

The Living Trust

• It plans for your disability

• It plans for your loved ones

• Contains your loving instructions

• Its private and confidential

• Reflects your hopes, fears, dreams and values

• Its good in every state

How to Distribute to Your Heirs

• No protection

• Creditor protection• Predator protection• Self protection• Estate tax protection

• Outright

• In Trust

Disinheriting That One Relative

Basic Estate and Gift Tax Rules

• It’s a tax on everything• Estate and gift taxes begin at 37%• $11,000 annual exclusion*• Unlimited marital deduction• $1,000,000 unified credit**• Unlimited charitable deduction• Use it or lose it

* Indexed for future inflation * * Varies depending on the year of death

Tom and Cindy Client

Tom: 55 years of age, lawyer, married 3 children.

Cindy: Wife, owns video store, mother of 3 children.

Peter: 25, manages video store, married

Paul: 22, UNLV, lifeguard.

Mary: 14, 8th grade, soccer star.

Tom and Cindy’s AssetsFamily home $ 300,000Furniture, household goods 50,000Automobiles 20,000Stocks 80,000Video Store 350,000Law Practice 150,000Life Insurance 750,000Retirement Plans 300,000

Total $2,000,000

Tom’s WillTom’s Will

Tom’s Will Plan

CindyCindy

Peter, Paul& Mary

Peter, Paul& Mary

Tom’s WillTom’s Will

Tom’s Will Plan

$0 TaxCindy

$2,000,000

Cindy$2,000,000

$435,000 Peter, Paul& Mary

$1,565,000

Peter, Paul& Mary

$1,565,000

A Better Plan

$0 Tax

FamilyTrust

FamilyTrust

$1,000,000

MaritalTrust

$1,000,000

MaritalTrust

$1,000,000

$0 Tax

Peter, Paul& Mary

Peter, Paul& Mary

$0 Tax

$1,000,000Coupon

$0 Tax$2,000,000

Tax Savings$435,000

Maximizing the Use ofthe Credit Shelter Exemption

• One dimensional planning

– All to spouse

– Wastes one unified credit

• Two dimensional planning

– Use of credit shelter trust on first death

– Saves a minimum of 435,000 in estate taxes

Who Should Bethe Beneficiary of

Your IRA or Qualified Plan?

Power of Tax Deferred Investing

Tax Deferred Investment

$1 doubled every year for 20 years tax free

$1,048,567

Taxable Investment

$1 doubled every year for 20 years taxable 29%

$45,700

Save For Your Retirement, But . . .

• You may not need it

• You may dieprematurely

IRA

LifetimeDistributions

BeneficiaryDesignation

Beneficiary Designation

• How much I have to take out

• Continued tax deferral on death

• Meeting estate planning goalsGiving what I have

- To who I want- When I want- The way I want

IRA

Spouse Individuals Trust Charity

Who Should Be Your Beneficiary?

• Split Your IRA’s– Charity

– Trust

– Spouse

• Use of Disclaimers– Spouse

– Trust

The Next Step

• Complete Estate Planning Worksheet

• Seek Competent Legal Counsel