1. Estate Planning Basics
January 19, 2018

2. Agenda What Is An Estate Plan? Finding Advisors Power of Attorney
Wills and Trusts
Financial Snapshot
Special Assets & Taxes

3. What IS an Estate, Why Plan?
Your estate is everything you own at death, such as bank accounts, investments, real estate, insurance, and personal property (vehicles, furniture, jewelry, art, copyrights, etc).
A complete estate plan speaks for you. It should:
Specify any life-prolonging medical care you wish to receive and the person to make decisions on your behalf.
Specify a person to make financial decisions on your behalf.
Specify any funeral and burial arrangement you want.
Specify a guardian for any minor children.
Identify who receives your property.
Directs how your heirs receive your property.
But still, why should you plan your estate now?

4. Why Plan?
Planning now allows you to choose how you will be cared for and who will receive your property.
Without a plan in place, state law and a judge will decide what happens to you and your property.
Once you have a plan, you should review it:
Every 5 years
Marriage
Divorce
Death of a spouse or partner
Birth of child
Death of child or primary beneficiary

5. Finding Advisors
Professional advisors should be utilized to provide you with the best advice for your plans and aspirations.
Advisors will help you navigate questions about:
Community property - Washington
Evaluating and drafting wills and trusts
Power of attorney
Health care directives
Dispositive options
Possible taxes
Selecting a personal representative/executor and/or trustee

6. Power of Attorney Durable Financial (General) Power of Attorney
Appoint a person to manage your finances in certain situations.
Your attorney-in-fact can have broad powers to manage all of your finances.
Becomes active under certain conditions you define or when your doctor determines your lack of capacity.
Durable Health Care Power of Attorney, Living Will, and Advanced Medical Directive
Appoint a person to serve as your agent for health care decisions.
Define, broadly or specifically, the type and manner of care you wish to receive if you no longer have the capacity to make decisions.

7. Wills and Trusts
A will is a legal document governing the disposition of your property subject to probate.
Probate assets are subject to state law, subject to public inspection.
Probate laws provide for court filings and creditor deadlines.
Court venue for disputes.
A trust (revocable living trust) is a legal entity that holds your assets during life and distributes the assets at death.
Assets held by a revocable living trust are excluded from probate.
Private transfer of assets.
Private provisions of trust.
May avoid requirements and expense of probate.

8. Wills and Trusts
Both wills and trusts can include dispositive provisions to control the use of and/or access to inheritance.
A testamentary trust can be established by both structures.
The terms of the trust will determine the type of trustee needed.
Options are very flexible.
Certain assets distribute independently from wills and trusts.
POD (banks) and TOD (brokerages) provisions
Retirement Accounts
Life Insurance

9. Financial Snapshot Estimate your (or your family’s) balance sheet
Collect your financial records.
January through March are good times – annual statements and tax forms are typically mailed.
Organize into assets (property) and liabilities (debt)
Review the beneficiary designations of your property
Pre-tax retirement accounts, such as IRAs, 403(b)s, 401(k)s
After-tax retirement accounts, such as Roth IRAs
Investment and bank accounts
Life insurance and annuities

10. Special-Attention Assets
Pre-tax retirement accounts
401(k); 403(b); traditional, rollover, and SEP IRAs; 457 plans.
Retirement accounts funded with pre-tax earnings are subject to income tax. Does not apply to Roth structures.
Income tax due when withdrawals are made.
Income tax due when inherited by a non-spouse (IRD).
Deferred annuities
Any increase in value of annuity is taxable as income when received.
Survivor benefits (surrender value) will be partially taxable as income.
Discuss options with your insurance/annuity company.
Use these assets first for charitable gifts!

11. Possible Taxes Income Tax – Retirement Accounts Estate and Gift Tax
Income in Respect of a Decedent (IRD)
Pre-tax assets will be taxed at some time
Review your 401(k), 403(b), IRAs, and deferred annuities
Estate and Gift Tax
Washington are Oregon have estate tax
WA: $2,000,000
OR: $1,000,000
Federal estate and gift tax starts at $11,200,000
Capital Gains Tax Reduction
Cost basis step-up upon death

12. Additional Resources Washington State Bar Association:
Washington State Bar Association Lawyer Search:
Thomson Reuters:
FINRA (Financial Industry Regulatory Authority)
Contact Me:
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