1. 1 Farm Succession Planning

2. 2 Marsha Goetting Ph.D., CFP, CFCS èProfessor & Extension Family Economics Specialist èDepartment of Agricultural Economics & Economics

3. 3 Special Request from: Members of Planning Committee

4. 4 Make your estate planning presentation!!!!!! n Lively n Interesting n Exciting

5. 5 Don’t want to think about  Death  Dying

6. 6 Experiment Succession/Estate Planning Team Contest u Valuable prizes !!!

7. 7 n 3 - 5 people Divide into Groups

8. 8 First Decision n Select Team Name u 30 Seconds

9. 9 Second Decision – Select Team Runner n Each time your team responds to a question ò Write team name & answer on sticky note RavalliRaiders 50%

10. 10 n Rewards u “Winning Team” F gets to select prizes at the end of the session

11. 11 “Who” Gets Your Property When You Die????

12. 12 State Law Determines

13. 13 Titled Real Property includes: n Land n Home

14. 14 Titled Personal Property includes: n Savings & Checking Accounts n Certificates of Deposits n Motor Vehicles n Stocks & Bonds

15. 15 Property passes by: n Contract Law n Written Will n Law of Decent & Distribution n Trust Agreement

16. 16 Contract Law n Beneficiary Designations u Life insurance u Annuities u IRAs u Keogh

17. 17 Life Insurance n Bill n Vere

18. 18 Beneficiary n Bill has $100,000 life insurance policy n Designates Vere as his primary beneficiary

19. 19 Bill’s Will n “I bequest all my life insurance proceeds to my son, Chris Shelton.”

20. 20 Who gets $100,000? n Vere, wife? n Chris, son?

21. 21 $100,000 Life Insurance Proceeds n Vere n Contractual arrangement u Designated Beneficiary

22. 22 Estate Planning Task n Determine who are the beneficiaries of your life insurance policy/policies

23. 23 Payable on Death Designation (POD) n Accounts at financial institutions n At death ownership passes to POD beneficiaries

24. 24 Transfers on Death (TOD) Registration n Stocks n Bonds n Mutual funds

25. 25 Dying Without a Will: Who Receives Your Property?

26. 26 PERSONAL PROPERTY No matter where located, distributed according to laws of state in which decedent had domicile at time of death.

27. 27 REAL PROPERTY Located outside state of residence distributed according to that state’s intestacy laws.

28. 28 Estate Planning Task n What & Where u Determine in whose name is on title of real & personal property u Location

29. 29 Business Arrangements-- 2002 Census, Washington Sole proprietorship/family 85% Partnership 6% Corporation 8% Estates/trusts, other 1% 40,033 farms

30. 30 Single Person Property in one person’s name only. Part of owner’s estate upon death.

31. 31 Single Person Mother 1/2 Dad 1/2 Single Guy/Gal

32. 32 What fraction (if any) will brother receive? No Written Will

33. 33 Team Question n What share if any does Bother receive?

34. 34 What fraction (if any) will brother receive? No Written Will

35. 35 ? Right of Representation

36. 36 Married Couple n John & Mary property titled John’s name only (sole proprietorship) No childrenNo children

37. 37 Auto Accident n John dies first n Mary dies 3 days later

38. 38 Team Question n Who receives the property?

39. 39 Who Receives? n John dies first n Mary dies 3 days later

40. 40 Who receives????? n John dies first n Mary dies 3rd Day n Mary’s relatives receive property

41. 41 Need for will n John & Mary need a written will F if they want to control who receives their property

42. 42 JOINT TENANCY Real Property

43. 43 JOINT TENANCY n On death of either, survivor takes all

44. 44 JOINT TENANCY

45. 45 Husband dies: Survivors, wife surviving joint tenant; his children

46. 46 Husband dies: Survivors, wife surviving joint tenant; his children

47. 47 Wife dies with all property

48. 48 Wife dies with all property

49. 49 Remarriage with husband as joint tenant husband

50. 50 Husband dies: Survivors, wife surviving joint tenant; his children

51. 51 Life Estate Remaindermen

52. 52 Estate Planning Task n Review titles on real property

53. 53 Family Tree

54. 54 Question: What fraction, if any does grandchild receive? ?

55. 55 Survivors : 3 children

56. 56 Survivors : two children & grandchildren Right of Representation

57. 57 Survivors : one child & grandchildren Right of Representation

58. 58 Survivors : One child & grandchildren ? Right of Representation

59. 59 Survivors : Grandchildren

60. 60 Written Will

61. 61 Question n What % of Americans die without a written will?

62. 62 7 out of 10 do not have a will

63. 63 Requirement n Sound mind u Know nature of property u Know those to whom he/she would give property

64. 64 “Being of sound mind I spent it all.” Here is your DAD’S will

65. 65 MAKING A WILL n Undue Influence

66. 66 Adopted Children á Have same rights as your biological children

67. 67 MUST a parent leave his/her children anything? NO!

68. 68 “To my son I leave the pleasure of earning a living. For 25 years he thought the pleasure was mine. He was mistaken.” Dad’s Will

69. 69 Heinrich Heine Made his wife sole beneficiary on the condition that she remarry because then “ there will be at least one man to regret my death ”

70. 70 Non-Titled Property Owner is not identified with a written document

71. 71 Non-titled property: n Guns n Tools n Furniture n Dishes n Linens & needlework n Collections

72. 72 Personal Belongings n Wedding photographs n Baseball glove n Books n Christmas decorations n Jewelry

73. 73 Washington Separate Listing Tangible Personal Property

74. 74 Separate ListingItem my Grandma Ray’s Opal Ring my niece, Bethany Buczinski my Montana Sapphire Ring my friend, Barbara Miller DateSignature

75. 75 Where to keep a will?? n Clerk of Court office n Attorney’s office n Safe deposit box n Don’t store original at home

76. 76 Where is the will? n Inform family members or personal representative

77. 77 Wills ????

78. 78 Question n What % of deceased persons’ estates paid a federal estate tax in 2003?

79. 79 Federal Estate Tax n 2 %

80. 80 Federal Estate Tax Exclusions & Credits

81. 81 Planning Technique Die in appropriate year !!!

82. 82 Single Person-- Applicable Credit

83. 83 Spouse takes all n Surviving spouse who takes unlimited marital deduction

84. 84 $4 Million Estate (2007)-- Unlimited Deduction

85. 85 Wife: $4 Million 2007

86. 86 Instead take: n Partial u equal to amount of exclusion/credit n Leave rest to family trust with spouse income

87. 87 Use Dad’s Applicable Exclusion on 4M Estate

88. 88 Mom’s Estate

89. 89 Estate Size $4,000,000 n Tax Savings With Planning u $920,000

90. 90 Concern n What if….. Mom marries the “hunk” down the road?

91. 91 Concern n What if……… Dad marries the “floosie” down the road?

92. 92 Another approach n Q-tip Trust u Amount of exclusion/credit

93. 93 Use Dad’s Applicable Exclusion on 4M Estate

94. 94 Mom’s Estate

95. 95 Estate Size $4,000,000 n Tax Savings With Planning u $920,000

96. 96 Team Question n Value of John’s gross estate for federal estate tax purposes? u $2,500,000 Living Trust u $ 100,000 Saving Bonds/POD Wife u $ 150,000 Joint Tenancy/Son u $ 250,000 Life Insurance Policy u $ 500,000 Tenancy in Common with spouse

97. 97 Team Question n Value of John’s estate? u $2,500,000 Living Trust u Included

98. 98 Team Question n Value of John’s estate? u $100,000 Saving Bonds/POD Wife u Included

99. 99 Team Question n Value of John’s estate? u $150,000 Joint Tenancy/Son u All included, unless contribution shown

100. 100 Team Question n Value of John’s estate? u $250,000 Life Insurance Policy u Included

101. 101 Insurance Proceeds included in estate if: n Receivable by estate n Receivable by another for benefit of estate n Decedent had incidents of ownership

102. 102 $2.75 Million Estate $250,000 Policy 2007 Parent Owned

103. 103 Parent Owned Policy-2007

104. 104 $2.75 Million Estate Child Owner of Policy

105. 105 Federal Estate Taxes Saved on $250,000 policy n Adult child as owner of policy save $115,000

106. 106 Team Question n Value of John’s estate? u $500,000 Tenancy in Common with spouse u ½ half included u $250,000

107. 107 John’s Estate Value $3,500,000 Exemption 2007 $2,000,000 ***$690,500 due in tax

108. 108 Federal Gift Tax

109. 109 Question n What is the amount that can be gifted yearly without a federal gift tax?

110. 110 Annual Gifts $12,000 n To as many people as you wish n Tax free

111. 111 Gift-splitting n Spouse may join in gift $24,000

112. 112 Federal Gift Tax Exclusions & Credits

113. 113 n Rewards u Winning Team

114. 114 Marsha A. Goetting MSU Extension Family Economics Specialist P. O. Box 172800 Montana State University Bozeman, MT 59717 406-994-5695

115. 115 Marsha A. Goetting goetting@montana.edu