1. Golden Opportunities for 2012
Estate Planning Ideas That Will Impact The Bottom Line!
June 14, 2012
By: John P. Dedon
Odin, Feldman & Pittleman, P.C.
9302 Lee Highway, Suite 1100
Fairfax, Virginia 22031
(703)

2. Personal Asset Accumulation
Wages
Qualified Plans
Investment
Income
Closely Held
Business
Inheritance

3. Assets At Risk (4 Areas of Risk)
Potential Creditors
35% Income Tax
IRS
Estate Tax
(?)
3-6% Probate & Legal Expenses

4. Proper Planning Will Allow You to . . .
Give what you have,
To whom you want,
When you want, and
In the way you want
And Pay Less for:
Court Costs
Attorney’s fees
Estate Taxes

5. Other Fundamental Planning Issues
Children from a previous marriage and second spouse
Children with special needs
Children with creditor, financial, or marital problems
Property in multi-states
Competency issues in future (parents)
Spouse who would need help managing and investing funds

6. Assets Passing Without a Will Go Through Probate
Assets Passing With a Will Go Through Probate

7. Probate Cost Time Delays Publicity Property In Multiple States Hassle
Avoid Probate With Revocable Trust

8. BASIC PLANNING SHOULD INCLUDE
Wills
Revocable Living Trusts
Advanced Medical Directives (Living Wills)
Powers of Attorney

9. Estate Tax : Year Exemption Amount No estate tax* 2010 $5 Million**
2011 and 2012
2013
? - What will Congress do?
*Income Tax
**35% Estate Tax Rate
***55% Estate Tax Rate

10. Taxes are Due Nine Months After Your Death
IRS
MONTH 9

11. Current Lifetime Gifting Rates
$ 13,000 Annual Exclusion
2011 and $5 Million
$1 Million

12. Two Case Studies
Dad
Mom
2 Children

13. Profile Married $10 Million +
Equity in closely held business, real estate, retirement plans, other liquid assets, life insurance

14. Assets $ 1,500,000 $ 800,000 Retirement $ 450,000 $100,000 Liquid
$ 800,000
Retirement
$ ,000
$100,000
Liquid
$10,000,000
Insurance
$ 2,000,000
$250,000
Closely Held Business
$12,000,000
Total
$14.450,000
$350,000
$12,300,000
Grand Total = $10 million +

15. Objectives Provide for surviving spouse
Provide for children at second death
Eliminate probate
Eliminate or avoid estate tax
Eliminate or avoid estate tax in perpetuity
Asset protection to protect children from divorce, creditors

16. Solutions – Case Study I Step I
Wills, Revocable Trusts with credit trust and marital trust for surviving spouse, Powers of Attorney and Medical Directives.

17. Solutions Step II Focus on $10 million of marketable securities
Spousal access Trusts
Each spouse transfers his and her own assets to the other’s Trust
Use exemption amount and file gift tax return

18. Bank Trustee Grantor Beneficiaries = Wife and Children Wife’s Trust
$5 Million
Beneficiaries =
Wife and Children

19. Bank Trustee Grantor Beneficiaries = Husband and Children
Husband’s Trust
$5 Million
Beneficiaries =
Husband and Children

20. Why
Estate and GST Exemption Applied - $10 Million + Appreciation Estate Tax Free
Asset Protection
Each Other
Children
Access

21. Problems (and Solutions)
Divorce
Death
Legal Issues
Support
Reciprocal Trust

22. Solutions – Case Study II Step I
Wills, Revocable Trusts with credit trust and marital trust for surviving spouse, Powers of Attorney and Medical Directives.

23. Solutions Step II Focus on $12 million closely held business
Husband transfers discounted non-voting stock to Trust, per appraisal
Use $10 million exemption amount even though his name (gift splitting)

24. $1.2 Million
10% Equity
100% Voting = 100% Control
Bank
Trustee
Trust
$10,800,000
Before Discount
Grantor
100% of Non-voting stock
(90% of Equity)
Beneficiaries =
Wife and Children

25. Why
Estate and GST Exemption Applied - $10 Million + Appreciation Estate Tax Free
Asset Protection
Each Other
Children
Access
Husband has control through voting stock and access Trust during marriage
Wife is Trust beneficiary

26. Problems (and Solutions)
Divorce
Death