Truth About Estate Planning Law Offices Of Arthur J. Pauly, Jr. What You Should Know Before 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 property Life Insurance IRA’s 401(k)’s Annuities Planned Distributions Property titled in your name Probate Process

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 Assets Family home$ 300,000 Furniture, household goods50,000 Automobiles20,000 Stocks80,000 Video Store350,000 Law Practice150,000 Life Insurance750,000 Retirement Plans 300,000 Total$2,000,000

Tom’s Will Tom’s Will Plan Cindy Peter, Paul & Mary Peter, Paul & Mary

Tom’s Will Tom’s Will Plan $0 Tax Cindy $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 Family Trust Family Trust $1,000,000 Marital Trust $1,000,000 Marital Trust $1,000,000 $0 Tax Peter, Paul & Mary Peter, Paul & Mary $0 Tax $1,000,000 Coupon $0 Tax$2,000,000 Tax Savings $435,000

Maximizing the Use of the 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 Be the Beneficiary of Your IRA or Qualified Plan?

Qualified Plan Options Retain in Qualified Plan Annuity Lump Sum Distribution –IRA Rollover –Stock Redemption

401k Plan Stock Redemption Capital gain vs. ordinary income 10% premature withdrawal penalty

Pension or 401(k) ESOP or Savings Plan IRA Lump Sum Distribution

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 die prematurely

IRA Lifetime Distributions Beneficiary Designation

Beneficiary Designation How much I have to take out Continued tax deferral on death Meeting estate planning goals Giving what I have -To who I want -When I want -The way I want

IRA SpouseIndividualsTrust Charity

Who Should Be Your Beneficiary? Split Your IRA’s –Charity –Trust –Spouse Use of Disclaimers –Spouse –Trust

It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much you lose a little money - that is all. But, when you pay too little, you stand to lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot - it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that, you will have enough to pay for something better. John Ruskin ( )

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