1. Personal Finance Estate Planning
Bill Klinger

2. 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

3. 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

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

5. 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.

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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