Estate Planning For The Smaller Estate Robert Kennedy Branch Manager Woodbury Financial Services Member FINRA, SIPC & Registered Investment Adviser 9570 SW Barbur Blvd, Suite 307 Portland, OR (503) Neither Woodbury Financial Services, Inc., nor its registered representatives or employees provide tax or legal advice. As with all matters of a tax or legal nature, your should consult your tax or legal counsel for advice.

The Three Legged Stool  Build wealth Accumulate assets during lifetime inheritance  Conserve wealth Protect from loss during life Protect from loss at death  Transfer wealth Make sure it goes where you want it to go Make sure it goes when you want it to go

The smaller estate  Same challenges as bigger estates Current Estate Tax begins at $2,000,000 per person (2008)  The three legged stool still is applicable Accumulate assets Preserve assets Distribute assets

The planning process  Same as planning a trip Starting place  Where are you now?  Current assets and plan Destination  What is your goal?  How, when and to whom do we distribute assets? How will you get there?  Scenic route?  Will you drive, fly or take a bus?  Which tools will you use?  What strategies will you employ?

Planning tools  Wills or intestacy  Trusts Revocable living trust Testamentary trust ILIT  Lifetime gifts  Power of attorney  Joint tenancy

Strategies  Which tools will you use?  How will the tools be used?  How much flexibility do you want?  How much control do you want?  How much control will you give to your spouse or other beneficiaries?

Where are you now?

Family  Spouse, children, parents Age etc.  Special needs relative Physical or mental capabilities Minor Spendthrift Drug or alcohol issues  Expected gifts or inheritance

Family  Household income  Expenses  Known health issues

Family Goals

Family  Retirement planning Only 43% of report they/spouse have calculated how much they need to save by retirement 1  If you don’t know the destination, how do you know how to get there? Manage expectations  Where are you now?  When do you plan to retire?  How much will you need then?  How can you get there?  Is it reasonable? 1 Source: Employee Benefit Research Institute, 2007 Retirement Confidence Survey

Medical planning  Long Term Care Insurance  Consume assets to pay for care or preserve assets for heirs  Rely upon state medical assistance Asset limitation Income limitation  Consult a competent attorney

Existing Documents  Wills, trusts, power of attorney  Life insurance policies Ownership Beneficiary  Qualified plans and IRAs Beneficiary  Current gifting programs  Current ownership of assets

Wills  Not a “do it yourself” job Would you remove your own appendix?  Review regularly Changes in the law Move to new state Divorce or marriage  Joint tenancy  Intestacy

Example of Intestacy Laws  Oregon (super simplified) If surviving spouse has no step kids  everything to the spouse. If surviving spouse has step kids  ½ to the spouse, and ½ to the kids

Trusts  Not a will substitute  Revocable inter vivos (living) trust Death or disability  Testamentary  QTIP trust Second marriage  Special needs trust Handicapped dependent

Power of Attorney  Durable power of attorney  Living will  Health care directive

What is a Power of Attorney?  I grant to someone (my attorney in fact) the authority to act on my behalf in dealing with others Sell property Sign documents  Power is revoked by death or disability  Durable power survives disability  Gift provisions?

Current Financial Status

Financial considerations  Assets, liabilities, business interests  Need for asset protection Fire, liability, auto Disability and life insurance  Creditor protection Likely to be sued High risk business

Summary of assets  List all assets Asset class Growth rate Which will be spent at retirement  In what order

Protecting Assets  Weigh probability of loss against cost if loss occurs Homeowners insurance– low risk but high cost  Property insurance Fire etc.  Auto and liability insurance Young driver in family Excess coverage is cheap Umbrella coverage  Health and major medical  Life and disability insurance

Creditor protection  What’s exempt from creditors - what’s not Life insurance Annuities Qualified plans IRAs

Specific intentions  Specific bequests “I’ve already given my daughter $20,000” “I’ve promised my coin collection to my son”  Guardians for minor children  Personal representative

Planning

The Journey  OK, I know where I am now, and where I want to be. How do I get there? What’s the best route? Should I fly, drive, walk or ride with someone? Take a direct route or the most scenic?

The Plan  OK, I have a pretty good picture of where I am today. Based on my current plan, I see where I might be in the future. I know where I would like to be, and it’s different from where I might be. What’s next?

Planning  Plan for different life events Death Disability Retirement  There is no right or wrong way to plan  No problem has just one solution  A plan frequently results from making choices among a number of options.

Compare to a trip  I have one week’s vacation and want to go to Phoenix next week. What’s my plan? Drive?  Three days each way  Motels and gas Fly?  $500 air fare  Won’t have a car when I get there Change goals  Different destination  Wait until next year

Expectations  Your expectations?  Heir’s expectations?  Do they agree with each other? Should some children get more?

Keeping the plan up to date  Collecting data  Annual reviews  Modify plan as needed

Your team  It is important for you to build your team of experts Attorney Financial professional Other experts

Questions Neither Woodbury Financial Services, Inc., nor its registered representatives or employees provide tax or legal advice. As with all matters of a tax or legal nature, your should consult your tax or legal counsel for advice. Woodbury Financial Services Member FINRA, SIPC & Registered Investment Adviser 9570 SW Barbur Blvd, Suite 307 Portland, OR (503) woodburyfinancial.com