LIFE CHANGES& ESTATE LIFE CHANGES& ESTATE PLANNINGPLANNING

MARRIAGEMARRIAGE BIRTH OR ADOPTION OF BIRTH OR ADOPTION OF

CHILD(REN)CHILD(REN) DIVORCEDIVORCE DEATH OF CHILD OR SPOUSEDEATH OF CHILD OR SPOUSE OPENING NEW BUSINESSOPENING NEW BUSINESS CHANGES IN YOUR FINANCIAL CHANGES IN YOUR FINANCIAL

PROPERTYPROPERTY

ASSUMPTIONSASSUMPTIONS

WILL LIVE FOREVERWILL LIVE FOREVER WILL NEVER BE DISABLEDWILL NEVER BE DISABLED WILL NEVER REQUIRE LONG TERM CARE WILL NEVER REQUIRE LONG TERM CARE WILL NEVER NEED ANOTHER PERSON WILL NEVER NEED ANOTHER PERSON

TO MAKE MEDICAL DECISIONS FOR YOUTO MAKE MEDICAL DECISIONS FOR YOU ESTATE TAX LAWS WON’T APPLY TO YOUESTATE TAX LAWS WON’T APPLY TO YOU ESTATE PLANNING IS EASY, ANY ONE ESTATE PLANNING IS EASY, ANY ONE

CAN DO IT, AT ANY TIMECAN DO IT, AT ANY TIME NO NEED TO THINK ABOUT PLANNING NO NEED TO THINK ABOUT PLANNING

TODAY AS THERE WILL ALWAYS BE TODAY AS THERE WILL ALWAYS BE TOMORROW.TOMORROW.

KEY ASSUMPTIONSKEY ASSUMPTIONS

WILL LIVE FOREVERWILL LIVE FOREVER WILL NEVER BE DISABLEDWILL NEVER BE DISABLED WILL NEVER REQUIRE LONG WILL NEVER REQUIRE LONG

TERM CARE TERM CARE WILL NEVER NEED ANOTHER WILL NEVER NEED ANOTHER

PERSON TO MAKE MEDICAL PERSON TO MAKE MEDICAL DECISIONS FOR YOUDECISIONS FOR YOU

KEY ASSUMPTIONSKEY ASSUMPTIONS

ESTATE TAX LAWS WON’T APPLY TO ESTATE TAX LAWS WON’T APPLY TO YOUYOU

ESTATE PLANNING IS EASY, ANY ESTATE PLANNING IS EASY, ANY ONE CAN DO IT, AT ANY TIMEONE CAN DO IT, AT ANY TIME

NO NEED TO THINK ABOUT NO NEED TO THINK ABOUT PLANNING TODAY AS THERE WILL PLANNING TODAY AS THERE WILL ALWAYS BE TOMORROW. ALWAYS BE TOMORROW.

EXCUSESEXCUSES

ONLY THE WEALTHY HAVE ESTATESONLY THE WEALTHY HAVE ESTATES MY SPOUSE WILL INHERIT ALL MY MY SPOUSE WILL INHERIT ALL MY

PROPERY TAX FREEPROPERY TAX FREE I DON’T NEED TO DO ANY PLANNINGI DON’T NEED TO DO ANY PLANNING ESTATE IS DEFINED BY BLACK’S LAW ESTATE IS DEFINED BY BLACK’S LAW

DICTIONARY AS AN INTEREST IN DICTIONARY AS AN INTEREST IN LAND OR OTHER PROPERTYLAND OR OTHER PROPERTY

UNLIMITED MARITAL UNLIMITED MARITAL DEDUCTIONDEDUCTION

Allows one spouse to pass an Allows one spouse to pass an unlimited amount of assets unlimited amount of assets tax-tax-deferreddeferred to the other spouse in life or to the other spouse in life or at death (unless one spouse is not a at death (unless one spouse is not a U.S. citizen). Where non US spouse, U.S. citizen). Where non US spouse, transfer is taxable unless made transfer is taxable unless made through a Qualified Domestic Trust through a Qualified Domestic Trust (QDOT). (QDOT).

10 QUESTIONS TO ASK 10 QUESTIONS TO ASK YOURSELFYOURSELF

ARE YOU EXPECTING TO LIVE LONGERARE YOU EXPECTING TO LIVE LONGER DO YOU HAVE CHILDREN, ARE THEY FROM DO YOU HAVE CHILDREN, ARE THEY FROM

MORE THAN ONE RELATIONSHIPMORE THAN ONE RELATIONSHIP HAVE YOU BEEN MARRIED MORE THAN 1XHAVE YOU BEEN MARRIED MORE THAN 1X WHAT ARE YOUR HOPES AND DREAMSWHAT ARE YOUR HOPES AND DREAMS WHAT HAVE YOU DONE TO ASSUE WHAT HAVE YOU DONE TO ASSUE

ACHIEVING YOUR HOPES & DREAMS?ACHIEVING YOUR HOPES & DREAMS?

10 QUESTIONS TO ASK 10 QUESTIONS TO ASK YOURSELFYOURSELF

ARE YOU PREPARED FOR A CATASTROPHIC ARE YOU PREPARED FOR A CATASTROPHIC EVENT?EVENT?

ARE YOUR ASSETS PROTECTED IN THE ARE YOUR ASSETS PROTECTED IN THE EVENT OF LONG TERM CARE?EVENT OF LONG TERM CARE?

DO YOU WANT YOUR ESTATE TO INCUR DO YOU WANT YOUR ESTATE TO INCUR THE COSTS, DELAYS, EXPENSE AND THE COSTS, DELAYS, EXPENSE AND PUBLIC NATURE OF A PROBATE PROCESS?PUBLIC NATURE OF A PROBATE PROCESS?

WHAT HAVE YOU DONE TO MINIMIZE WHAT HAVE YOU DONE TO MINIMIZE STATE OR FEDERAL ESTATE TAXES?STATE OR FEDERAL ESTATE TAXES?

IF YOU HAVE DONE NOTHING HOW WILL IF YOU HAVE DONE NOTHING HOW WILL YOU PROTECT YOUR FAMILY AND ASSETS?YOU PROTECT YOUR FAMILY AND ASSETS?

ESTATE PLANNINGESTATE PLANNING

PRIMARY FUNCTION OF AN ESTATE PRIMARY FUNCTION OF AN ESTATE PLANPLAN– PEACE OF MINDPEACE OF MIND– MAINTAIN CONTROLMAINTAIN CONTROL– PROTECT ASSETS FOR YOURSELF & LOVED PROTECT ASSETS FOR YOURSELF & LOVED

ONESONES ESTATE TAXESESTATE TAXES CREDITORSCREDITORS SPECIAL NEEDSSPECIAL NEEDS

– AVOID PROBATEAVOID PROBATE

ESTATE PLAN IS LIKE A ESTATE PLAN IS LIKE A PUZZLEPUZZLE

LEGAL DOCUMENTSLEGAL DOCUMENTS LONG TERM CARE INSURANCELONG TERM CARE INSURANCE LIFE INSURANCELIFE INSURANCE DISABILITY INSURANCEDISABILITY INSURANCE RETIREMENT FUNDSRETIREMENT FUNDS REVERSE MORTGAGEREVERSE MORTGAGE PUBLIC BENEFITSPUBLIC BENEFITS

ESTATE PLANNINGESTATE PLANNING

WHAT CONSTITUTES A GOOD WHAT CONSTITUTES A GOOD ESTATE PLANESTATE PLAN– WELL THOUGHT OUTWELL THOUGHT OUT– COMPREHENSIVECOMPREHENSIVE– ACHIEVES YOUR GOALS AND ACHIEVES YOUR GOALS AND

OBJECTIVES DURING YOUR LIFETIME OBJECTIVES DURING YOUR LIFETIME AND BEYONDAND BEYOND

ESTATE PLANNINGESTATE PLANNING

WHAT CONSTITUTES A BAD ESTATE WHAT CONSTITUTES A BAD ESTATE PLANPLAN– NOT THOUGHT OUT;NOT THOUGHT OUT;– NOT PREPARED FOR THE NOT PREPARED FOR THE

UNTHINKABLE;UNTHINKABLE;– DOES NOT PRESERVE FAMILY DOES NOT PRESERVE FAMILY

HARMONY;HARMONY;– DOES NOT PRESERVE ASSETS;DOES NOT PRESERVE ASSETS;– NO PLAN.NO PLAN.

ESTATE PLANNNINGESTATE PLANNNING

CONSEQUENCES OF POOR OR NO PLANNINGCONSEQUENCES OF POOR OR NO PLANNING MAY NEED A GUARDIANSHIPMAY NEED A GUARDIANSHIP MEDICAL WISHES MAY NOT BE CARRIED MEDICAL WISHES MAY NOT BE CARRIED

OUTOUT STATE LAW VIA A PUBLIC PROBATE STATE LAW VIA A PUBLIC PROBATE

PROCESS DECIDES WHO RECIEVES YOUR PROCESS DECIDES WHO RECIEVES YOUR ASSETS AND IN WHAT PROPORTIONS;ASSETS AND IN WHAT PROPORTIONS;

COURT DECIDES WHO RAISES YOUR COURT DECIDES WHO RAISES YOUR MINOR CHILDREN;MINOR CHILDREN;

HEIRS MAY UNNECESSARILY INCUR HEIRS MAY UNNECESSARILY INCUR ESTATE TAXES.ESTATE TAXES.

SOME EXAMPLES OF LEGAL SOME EXAMPLES OF LEGAL DOCUMENTSDOCUMENTS

WILLWILL TRUSTTRUST DURABLE POWER OF ATTORNEYDURABLE POWER OF ATTORNEY LIVING WILL & HEALTH CARE PROXYLIVING WILL & HEALTH CARE PROXY DECLARATION OF HOMESTEADDECLARATION OF HOMESTEAD BUSINESS SUCCESSION PLANBUSINESS SUCCESSION PLAN PRENUPTIAL AGREEMENTPRENUPTIAL AGREEMENT CARE TAKER AGREEMENTCARE TAKER AGREEMENT

WILLWILL

A document that controls the flow of your A document that controls the flow of your personal property such as jewelry, family personal property such as jewelry, family heirlooms, and assets held in your name heirlooms, and assets held in your name only. It does only. It does notnot control what passes by control what passes by beneficiary designation (for example, life beneficiary designation (for example, life insurance, IRAs, retirement plans, insurance, IRAs, retirement plans, Transfer on Death agreements), by Transfer on Death agreements), by contract (for example, accounts held by contract (for example, accounts held by joint tenancy with rights of survivorship), joint tenancy with rights of survivorship), or by trust. or by trust.

PERSONS APPOINTEDPERSONS APPOINTED ExecutorExecutor

The person who administers your final estate. The person who administers your final estate. That person should be sensitive to the needs That person should be sensitive to the needs of your beneficiaries, competent to handle of your beneficiaries, competent to handle financial and legal matters, and available and financial and legal matters, and available and willing to take on responsibilities.willing to take on responsibilities.

GuardianGuardian The persons who will take care of your The persons who will take care of your dependents. They should know your children dependents. They should know your children already (if possible), have similar philosophic already (if possible), have similar philosophic views to your own, and be financially able to views to your own, and be financially able to take on the responsibility of caring for your take on the responsibility of caring for your children.children.

WILL - REQUIREMENTSWILL - REQUIREMENTS

18 Years of Age or Older18 Years of Age or Older Sound MindSound Mind No Undue InfluenceNo Undue Influence TypedTyped DeclarationDeclaration Sign and dateSign and date 2 Impartial Witnesses.2 Impartial Witnesses.

GROUNDS FOR WILL GROUNDS FOR WILL CONTESTCONTEST

LACK OF TESTAMENTARY LACK OF TESTAMENTARY CAPACITY.CAPACITY.

UNDUE INFLUENCEUNDUE INFLUENCE FRAUDFRAUD IMPROPER EXECUTIONIMPROPER EXECUTION

TRUSTSTRUSTS

A separate entity that holds property A separate entity that holds property for the benefit of either the grantor for the benefit of either the grantor (creator) of the trust or his or her (creator) of the trust or his or her heirs. A trustee manages the assets heirs. A trustee manages the assets that are placed in the trust and makes that are placed in the trust and makes sure that the terms of the trust are sure that the terms of the trust are followed. followed.

LIVING TRUSTLIVING TRUST

A trust that's established while you are A trust that's established while you are alive. You can declare yourself the trustee alive. You can declare yourself the trustee of the trust until you are no longer able to of the trust until you are no longer able to act on your own behalf. You can set act on your own behalf. You can set standards for determining capacity--for standards for determining capacity--for example, your doctor and your spouse example, your doctor and your spouse must agree that you are unable to make must agree that you are unable to make significant decisions on your own. Assets significant decisions on your own. Assets must be re-titled in the name of your living must be re-titled in the name of your living trust. At your death, any assets in the trust. At your death, any assets in the living trust do not have to go through living trust do not have to go through probate. probate.

TESTAMENTARYTESTAMENTARY

Just the opposite of a "living trust." Just the opposite of a "living trust." This trust isn't established until after This trust isn't established until after you die. Your will typically includes you die. Your will typically includes the language to establish these trusts the language to establish these trusts at your death. This type of trust must at your death. This type of trust must be probated.be probated.

SHOULD EVERYONE HAVE A SHOULD EVERYONE HAVE A LIVING TRUST? LIVING TRUST?

Absolutely NOT!Absolutely NOT! A living Trust is appropriate for A living Trust is appropriate for

persons who have concerns about persons who have concerns about – the Estate Tax, the Estate Tax, – Providing for offspring from a previous Providing for offspring from a previous

relationship, and relationship, and – Probate Avoidance.Probate Avoidance.

IRREVOCABLE LIFE IRREVOCABLE LIFE INSURANCE TRUSTINSURANCE TRUST

Removes the value of your life insurance Removes the value of your life insurance from your taxable estate. You irrevocably from your taxable estate. You irrevocably assign your policies to the trust. This assign your policies to the trust. This means you can't change your beneficiaries means you can't change your beneficiaries at a later date. You choose a trustee to at a later date. You choose a trustee to make sure the policy premiums are paid. make sure the policy premiums are paid. If you transfer life insurance policies to an If you transfer life insurance policies to an irrevocable trust, you must live three irrevocable trust, you must live three years past the date of transfer or the value years past the date of transfer or the value of the policies will be pulled back into of the policies will be pulled back into your estate. your estate.

MEDICAID QUALIFYING MEDICAID QUALIFYING TRUSTTRUST

A type of trust for a person who may A type of trust for a person who may require long term care and seeks to have require long term care and seeks to have asset protected in order for Medicaid to pay asset protected in order for Medicaid to pay for such care.for such care.

Trust must be irrevocable.Trust must be irrevocable. Should be income onlyShould be income only ““Trigger Trust” no longer valid. Trigger Trust” no longer valid.

ALTERNATIVESALTERNATIVES

Buy Long Term Care Insurance;Buy Long Term Care Insurance; Convert Countable Assets into Non Convert Countable Assets into Non

Countable AssetsCountable Assets Take advantage, if possible, of transfers that Take advantage, if possible, of transfers that

can be made without satisfying a look backcan be made without satisfying a look back– Resource Allowance for Community SpouseResource Allowance for Community Spouse– Son/daughter care taker ruleSon/daughter care taker rule

Create a Special Needs TrustCreate a Special Needs Trust

MEDICAID RULESMEDICAID RULES

Countable AssetsCountable Assets– Cash over $2,000 or $3,000Cash over $2,000 or $3,000– SecuritiesSecurities– Retirement AccountsRetirement Accounts– Time deposits – CD’sTime deposits – CD’s– Investment property & Vacation HomesInvestment property & Vacation Homes– Whole Life InsuranceWhole Life Insurance– 22ndnd Motor Vehicle Motor Vehicle– Every other asset not listed as non countableEvery other asset not listed as non countable

MEDICAID RULESMEDICAID RULES

Non Countable Assets a/k/a ExemptNon Countable Assets a/k/a Exempt– House used a primary residence;House used a primary residence;– Cash under $2,000 or $3,000;Cash under $2,000 or $3,000;– One Car;One Car;– Personal Jewelry;Personal Jewelry;– Household effects;Household effects;– Pre paid Funeral Plan;Pre paid Funeral Plan;– Burial Account no more than $2,500Burial Account no more than $2,500– Cash paid for legal fees to accomplish Medicaid planning;Cash paid for legal fees to accomplish Medicaid planning;

MEDICAID RULESMEDICAID RULES

Look back (pre 2004)Look back (pre 2004)– Transfers individuals must satisfy 3 year look back;Transfers individuals must satisfy 3 year look back;– Transfers into trust must satisfy 5 year look back;Transfers into trust must satisfy 5 year look back;– Trust must be irrevocable. If it is an income only trust the income Trust must be irrevocable. If it is an income only trust the income

must continue when the beneficiary requires long term care;must continue when the beneficiary requires long term care;– Where look back not satisfied for plans created prior to 2004, Where look back not satisfied for plans created prior to 2004,

“half a loaf” available;“half a loaf” available;– Half a Loaf would allow for Medicaid to calculate a penalty Half a Loaf would allow for Medicaid to calculate a penalty

period during which the applicant would be self-payperiod during which the applicant would be self-pay..

REVISING AN ESTATE REVISING AN ESTATE PLANPLAN

MARRIAGEMARRIAGE CHILD BIRTH/ADOPTIONCHILD BIRTH/ADOPTION DIVORCEDIVORCE DEATH OF BENEFICIARYDEATH OF BENEFICIARY CHANGE IN PROPERTYCHANGE IN PROPERTY CHANGE IN CIRCUMSTANCESCHANGE IN CIRCUMSTANCES