Estate Planning FAQ

1. Full name and date of birth of husband and wife
   Date of marriage
   Mailing address
   Telephone numbers
   Email address
   Name, date of birth and marital status of your children
   List of each child's descendants
   Name, address and telephone number of your accountant
   
   
2. List of assets and debts by category and estimated value 
   For example, “Stocks and bonds - $____”
   Another example, “Life insurance on husband - $____”
   Be sure to include life insurance, annuities and retirement accounts.
   List long term debts but not monthly expenses
   Identify any assets which are your separate property
   
   
3. List of your questions, concerns and goals regarding estate planning
   
   
4. Copy of your existing wills, trusts and powers of attorney

The legal fee for consultation and planning is an hourly fee. The legal fee for preparation of estate planning documents is a fixed fee depending on the type of document. After our meeting, I will summarize our discussion and my recommendations to you in a letter which includes a list of the applicable document fees.

• Will - "deed" to property - recorded ("probated") at death.
• Durable general power of attorney - authority to sign business documents -
  disability provision - record or deliver to agent.
• Medical power of attorney - authority to sign medical consents - deliver to doctor or children.
• Directive to physicians (living will) - authority to withdraw life support - deliver to doctor or children.
• Life insurance - purpose - consider the amount, type, owner and beneficiary.
• Retirement account and IRA - spouse as primary beneficiary for rollover, with children as contingent beneficiaries for deferred payout - perhaps charity as contingent beneficiary for tax free payout.
• Trusts - useful to reduce estate tax, protect from creditors, maintain separate property, and provide professional management.
• Nonprobate property - passes outside of will (perhaps contrary to will) - life insurance, retirement account, living trust, joint tenants with right of
  survivorship.
• Property agreement - identifies separate vs. community property - principal,
• income and personal compensation.
• Buy-sell agreement - termination of co-ownership - specific dollar amount and triggering event.
• Inventory of property, list of advisors and letter to family.

• Annual gift exclusion - $13,000/year/spouse/descendant.
• Simple will - all to spouse - defers all tax until death of second spouse - avoids tax on $10 million per family.
• Basic trust will - all to "income" trust for spouse - then outright to children - defers all tax until death of second spouse - avoids tax on $10 million per family
• Super tax planned will - $5 million to "bypass" trust for spouse, remaining property to "QTIP" trust for spouse, then to lifetime trusts for children - avoids tax at death of second spouse on $10 million - plus avoids tax at death of children on $10 million.
• Life insurance - irrevocable trust as owner and beneficiary - avoids tax on unlimited amount of life insurance.
• Family limited partnership - land, marketable securities and other investments - gifts of limited partnership interests while retaining personal control over investments - substantial discount in value for estate tax purposes.
• Split charitable gift - income to family and remainder to charity, or income to charity and remainder to family - substantial tax benefits, plus charity replaces IRS as partial recipient of estate.

• Estate tax - $5 million exemption / 35% tax
• Generation-skipping tax - $5 million exemption / 35% tax
• Gift tax - $5 million exemption / 35% tax
• Portability of spouse's unused estate tax exemption
• No portability of spouse's unused generation-skipping tax exemption
• Continued full step-up in basis at death
• Continued capital gain and dividend tax rate of 15%
• Continued FLP and other valuation discounts

• Revocable trust - property transferred to trust during lifetime.
• Trustee and beneficiary - self during lifetime, then family or bank.
• Administration - trustee rather than executor - little or no further transfer necessary at death.
• Advantages - avoids or minimizes probate, protects against incapacity, provides greater confidentiality, probably less expensive overall.
• Disadvantages - burden and expense prior to death, still need will for omitted property, still need transfers at death, no more tax benefits than testamentary trust.

A family limited partnership is simply a limited partnership comprised of members of your family. This type of partnership is often formed to own and manage valuable investments such as land, closely held stock, or marketable securities. Each spouse typically contributes his or her interest in those investments to the partnership, and gifts of limited partnership interests are then made to children or trusts for children. Both spouses may be general partners, and the children or trusts for the children are limited partners. The partnership usually provides substantial restrictions on removal of the general partner, withdrawal of any partner, transfer of any interest in the partnership, irregular or non-prorata distributions from the partnership, and dissolution of the partnership. A family limited partnership can serve as a substantial, but not complete, shield of assets inside the partnership from liabilities incurred outside the partnership. A family limited partnership can also serve to simplify or avoid probate of assets owned by the partnership. Furthermore, a family limited partnership can claim a substantial discount in value for gift and estate tax purposes. This valuation discount can significantly reduce estate tax, although the amount of discount is often challenged by the IRS.

• Homestead - urban (10 acres) or rural (200 acres).
• Personal effects - $60,000 per married couple.
• Spouse's separate property - partition community property
• Retirement plan and IRA.
• Life insurance and annuities.
• Educations accounts - Section 529 plans.
• Spendthrift trust - irrevocable - not for benefit of grantor.
• Family limited partnership - protects "inside" assets from "outside" liabilities.
• Corporation - protects “outside” assets from “inside” liabilities

• Stocks and bonds
  • Avoid capital
  • Deduction of FMV
  • Especially attractive during bull market
• Closely held corporate stock
  • Avoid capital gain
  • Deduction of FMV
  • Tax free redemption of stock
  • Use of corporate funds for personal charitable gift
• Real estate
  • Avoid capital gain
  • Deduction of FMV
  • All or undivided percentage
  • Outright gift or bargain sale
• Tangible personal property
  • Artworks, collections, equipment, etc.
  • Avoid capital gain
  • Deduction of FMV if related use
  • Permanent or time-sharing
• IRA or other retirement plan
  • Beneficiary upon death
  • Avoid devastating combination of estate tax and income tax
  • Minimum cost to family
• Life insurance
  • Owner or beneficiary
  • Deduction of CSV plus future premiums
  • Small current cost, large future benefit
• Bequest in will
  • Maximum personal flexibility during lifetime
  • Specific property or percentage of estate
  • Estate tax free
• Remainder interest in residence or farm
  • Reserved personal use for life
  • Deduction of remainder interest
  • No current out-of-pocket cost
• Gift annuity
  • Smaller payments than commercial annuity
  • Deduction of difference in value
  • Reduce capital gain                
  • Income partially tax free
• Charitable remainder trust
  • Fixed income to family for life, then remainder passes to charity
  • Deduction of remainder interest
  • Avoid capital gain and achieve tax free sale of property                  
  • Income fully taxable
• Charitable lead trust
  • Fixed income to charity for years, then remainder returns to family
  • No income tax deduction, but large gift and estate tax deduction
  • Longer the term of years, larger the deduction
  • Gift of philanthropy to children and gift of estate to grandchildren
• Private foundation
  • Charity controlled by family
  • Contributions tax deductible
  • Income tax exempt
  • Numerous administrative burdens and restrictions                
• Community foundation - donor advised fund
  • Similar to a private foundation
  • Qualifies as public charity
  • No administrative burdens
  • Effective control, but no legally binding control