The Importance Of An Estate Plan

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Information about The Importance Of An Estate Plan

Published on January 9, 2010

Author: jeffreyobrien

Source: slideshare.net

The Importance of an Estate Plan (In Ten Minutes or Less) Jeffrey O’Brien Attorney at Law Mansfield Tanick & Cohen, P.A.

Why Do You Need an Estate Plan? If you don’t create one, the State does it for you (intestate succession laws are the “default estate plan”); this can lead to results you don’t want Probate avoidance and estate tax minimization Avoid family disputes Appoint guardians for minor children

If you don’t create one, the State does it for you (intestate succession laws are the “default estate plan”); this can lead to results you don’t want

Probate avoidance and estate tax minimization

Avoid family disputes

Appoint guardians for minor children

The Basic Estate Plan Last Will and Testament General Durable Power of Attorney (very broad powers) “Statutory Short Form” Power of Attorney (for financial matters) Health Care Directive (your wishes on health care matters, especially treatment of terminal conditions)

Last Will and Testament

General Durable Power of Attorney (very broad powers)

“Statutory Short Form” Power of Attorney (for financial matters)

Health Care Directive (your wishes on health care matters, especially treatment of terminal conditions)

What to do with the dogs (or cats) MN does not allow trusts for pets Your will requires special language if you want to provide for someone to take care of your pets upon your death

MN does not allow trusts for pets

Your will requires special language if you want to provide for someone to take care of your pets upon your death

What About Trusts? Use of a revocable trust takes away the need to probate your estate BUT: make sure to fund the trust (i.e., re-title your assets in the name of the trust) Easy to transfer assets to beneficiaries of a trust upon death of grantor Private (probate – public proceeding through a court) No tax benefit to a revocable trust

Use of a revocable trust takes away the need to probate your estate

BUT: make sure to fund the trust (i.e., re-title your assets in the name of the trust)

Easy to transfer assets to beneficiaries of a trust upon death of grantor

Private (probate – public proceeding through a court)

No tax benefit to a revocable trust

Irrevocable Life Insurance Trusts Life insurance proceeds are non-probate assets BUT: life insurance proceeds are included in your taxable estate for estate tax purposes Solution: irrevocable life insurance trust (ILIT); after the policy/policies have been in the trust for three (3) years, the death benefits will be excluded from your taxable estate

Life insurance proceeds are non-probate assets

BUT: life insurance proceeds are included in your taxable estate for estate tax purposes

Solution: irrevocable life insurance trust (ILIT); after the policy/policies have been in the trust for three (3) years, the death benefits will be excluded from your taxable estate

Planning for Business Owners Nothing specific in intestacy statutes regarding transfers of businesses or real estate Buy-sell agreements funded with life insurance; owner dies, other owner(s) buy his interest with life insurance proceeds Real estate: family limited partnerships (FLPs) with gifting program (and use of valuation discounts) allow transfers to children/grandchildren free of gift tax

Nothing specific in intestacy statutes regarding transfers of businesses or real estate

Buy-sell agreements funded with life insurance; owner dies, other owner(s) buy his interest with life insurance proceeds

Real estate: family limited partnerships (FLPs) with gifting program (and use of valuation discounts) allow transfers to children/grandchildren free of gift tax

Reviewing & Updating Your Estate Plan Marriage/Divorce Death of a spouse Children Change in financial circumstances Regular review and updating of your plan is a must in order to avoid unintended consequences!

Marriage/Divorce

Death of a spouse

Children

Change in financial circumstances

Regular review and updating of your plan is a must in order to avoid unintended consequences!

Our Process We give you a “homework assignment” – asset information, family information, your desires as to who gets what, etc. We review this information at no cost and give you a recommended plan and a fee quote for implementation of the plan We work in tandem with, not exclusive of, your advisors (financial advisor, CPA) In most circumstances, we charge flat fees for our estate plan work

We give you a “homework assignment” – asset information, family information, your desires as to who gets what, etc.

We review this information at no cost and give you a recommended plan and a fee quote for implementation of the plan

We work in tandem with, not exclusive of, your advisors (financial advisor, CPA)

In most circumstances, we charge flat fees for our estate plan work

Average Fees Will for single person: $750.00 Wills for married couple which create trusts for children on parents’ death: $1,000.00 Revocable trust for single person: $1,500.00 Revocable trusts for married couple: $2,500.00 Irrevocable Life Insurance Trusts: $1,000.00 for 1 set (husband & wife) More complicated trusts: fees vary COMPARED WITH: AVERAGE COST OF PROBATE: $10,000.00 Any estate plan costs less than not having one at all!

Will for single person: $750.00

Wills for married couple which create trusts for children on parents’ death: $1,000.00

Revocable trust for single person: $1,500.00

Revocable trusts for married couple: $2,500.00

Irrevocable Life Insurance Trusts: $1,000.00 for 1 set (husband & wife)

More complicated trusts: fees vary

COMPARED WITH:

AVERAGE COST OF PROBATE: $10,000.00

Any estate plan costs less than not having one at all!

Ideal Referral Mom & Dad Yourselves Family, friends

Mom & Dad

Yourselves

Family, friends

Questions? Thank You! [email_address] http://www.linkedin.com/in/jeffreycobrien http://www.facebook.com/obrienjeffrey http://twitter.com/jeffobrien http://www.mansfieldtanick.com http://blog.jeffreyobrienesq.com 612.341.1263

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