Personal Finance Estate Planning Bill Klinger

Personal Finance Review Calculating how much income you need in retirement Calculating how much savings you will need in retirement Social Security Defined-benefit plans Defined-contribution plans IRA Roth IRA Advantages of each Strategy

Estate Planning What happens to your assets when you die? What assets? Everything What happens to you if you become incapacitated? What happens to you personally? What happens to your assets? Need to think about these before something happens

Estate Planning Tools Wills Health directives Powers of Attorney Asset titles Beneficiary designations

How Assets Pass at Death Contractually IRA beneficiaries 401(k) beneficiaries Pension plan beneficiaries Life insurance beneficiaries Annuity beneficiaries Jointly held assets Will NOTE: beneficiary designation overrides will. Keep beneficiaries up-to-date.

Wills Purpose Creating a will Types Distribute assets according to your wishes Without a will, ‘intestate’ Creating a will Use online template Get witnesses (non-beneficiaries) Types Simple Marital share

Will Components How assets are to be distributed Executor / Executrix Dollar amounts or percentages Specific items Executor / Executrix Carries out instructions of will Pays off debts Notifies people with interest or potential interest Guardian Who will be responsible for children? Signature Change a will as needed

Executing a Will Probate File Executor / Executrix Legal process File Copy of will List of assets and debts Executor / Executrix May open bank account for transition Keeps a clear record of transactions Pays debts, sells assets if required Check with local government for guidelines

Taxes Estate tax Inheritance tax Tax on person dying Federal estate tax $5.49M per person Can roll to spouse to get $11M total 40% tax rate above that NJ estate tax Phased out after 2017 Inheritance tax In NJ

Trusts Grantor, Trustee, Beneficiaries Types Living trust For while grantor is alive Avoid probate process Still pay estate tax Revocable living trust Can take back ownership of the assets Irrevocable living trust Cannot take back ownership of asset Assets no longer legally yours Can provide you with income Not part of your estate, so no estate tax Others Designed to control your assets after you die

Gifts Annual $14,000 per person gift exclusion Not taxed Couples can gift $28,000 per person annually No limits on charitable contributions May help get under estate tax limit

Other Legal Documents Living will Power of Attorney Health Care Proxy Specifies what should happen if you become physically or mentally disabled Power of Attorney Grants ability to make decisions for you Financial and other Can specify if only incapacitated or well Health Care Proxy Durable Power of Attorney for Health Care Grants power to make health care decisions for you

In Class In groups of two Chapter 20 Discussion and Review Questions