1. ©2015, College for Financial Planning, all rights reserved. Welcome

2. Expectations of Students Time/energy commitment Read assignments before class Tested on all LOs This course will enable you to: o be eligible to sit for the CFP ® Certification Examination o better serve clients/ grow your business o be successful on the College’s end-of- course examination 1-2

3. The quality of your Internet-streamed session depends on your connection: Reboot your PC before each session to refresh memory. Directly connect to the Internet. Delete cookies and temporary Internet files each week. Close other programs while attending your live online class. Before each session, in your live class, go to Meeting then Audio Setup Wizard to adjust your settings. These steps resolve 90% of issues. For Optimal Performance 1-3

4. Housekeeping Items 1. Professor contact information in eCampus 2. Tutorial in Lobby 3. Status changes 4. Text chat 5. Files for students 6. Recordings 7. Access Poll Layout 1-4     

5. ©2015, College for Financial Planning, all rights reserved. Session 1 Powers of Appointment and Community Property CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Estate Planning

6. Session Details 1-6 Module1 Chapter(s)1 LOs1-1 Identify the nature of estate planning, basic estate planning definitions, and the nontax characteristics of property interests and forms of property ownership. 1-4 Analyze a situation to determine whether a specific property interest is community or separate property.

7. Forms of Property Interests Legal v. Beneficial o Life estate, income and remainder interests o Trustee, custodian, conservator o JTWROS, TIC, TBE,CP o Power of appointment holder Present v. Future o Life estate, income and remainder interests o All forms of property ownership Life estate v. Term Certain o Lifetime, trusts, leases, business entities o All forms of property ownership Vested v. contingent— will, trust, deed 1-7

8. Forms of Property Interests General Powers of Appointment Holder can appoint one or more of the following parties holder, holder’s creditors, holder’s estate, or creditors of the holder’s estate; and Exercise of the power is not subject to ascertainable standard such as health, education, maintenance, or support (HEMS); or prior consent of the creator (donor) or a party with an interest adverse to that of the holder. 1-8

9. Forms of Property Interests Special (Limited) Powers of Appointment Holder cannot appoint any of the following parties: holder, holder’s creditors, holder’s estate, creditors of the holder’s estate; or Holder can appoint one or more of these parties, but exercise must be pursuant to ascertainable standard such as health, education, maintenance, or support (HEMS); or prior consent of the creator (donor) or a party with an interest adverse to that of the holder. 1-9

10. Procedure to Determine Type of POA Can the holder appoint any of the following as an appointee? o the holder o the holder’s creditors o the holder’s estate o the creditors of the holder’s estate If no, then power is special. If yes, then is presumption that power is general. Presumption can be overcome (and power will be special) if exercise of the power is subject to: o application of an ascertainable standard; or o the consent of the creator of the power or a party with an adverse interest to that of the holder. 1-10

11. Question 1 Mary Ellsworth has established and funded an irrevocable trust for the benefit of her family. She gave her husband, Tim, who is one of the income beneficiaries, “the right to demand that the trustee distribute no more than the greater of $5,000 or 5% of the value of the trust assets to any trust beneficiary during the last three months of any calendar year.” Which one of the following statements is correct? a.Mary has given Tim a special power of appointment. b.Mary has given Tim a general power of appointment. c.If Tim has not demanded that the trustee distribute any of the trust assets by December 31 of any year, he will be deemed to have released his power of appointment. 1-11

12. Characteristics of Forms of Property Ownership Traditional Community Property (CP) Each spouse has vested one-half interest in most property acquired during marriage regardless of title No survivorship rights; thus, probate is needed to transfer at death Available only in certain states Available only to married couples Couples can own property in other ways 1-12

13. #1 When was property acquired? if before marriage begins or after marriage ends, is not CP absent subsequent commingling if during marriage, is a presumption of CP absent subsequent commingling #2 Presumption of CP overcome if: funds used to purchase are separate property subject property was acquired by gift, bequest, or inheritance Procedure to Determine Separate v. Community Property 1-13 How is the property titled? If as CP, it is. If not, see questions below.

14. Quasi-Community Property Rules Quasi-community property laws apply if: o Property first acquired in a common law state o Property has been moved to a CP state that follows QCP principles (CA, AZ, ID, WA, WI) o One spouse has died or spouses are divorcing, and non-titled spouse seeks CP rights Consequences of application: property treated as CP if would have been CP by regular CP rules if acquired in CP state under same circumstances Note: IRS is not bound by QCP laws, and will tax property according to how titled. 1-14

15. Question 2 Which one of the following statements regarding Henry White, who recently married for the first time, is correct? a.In a community property state, Henry’s spouse is deemed to have a vested 50% interest in all of the property Henry owned at the time of the marriage. b.In a community property state, Henry’s earnings from his job subsequent to the date of his marriage will be considered community property. c.In a traditional community property state, any property Henry owns at death will go to his spouse by right of survivorship. 1-15

16. Question 3 If the proceeds from the sale of a community property home in a community property state are reinvested in a new home in a common law state, the new home will be considered to be community property. True False 1-16

17. ©2015, College for Financial Planning, all rights reserved. Session 1 End of Slides CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAM Estate Planning