By: John P. Dedon Odin, Feldman & Pittleman, P.C. 9302 Lee Highway, Suite 1100

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) 218-2131 John.Dedon@ofplaw.com

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

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

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

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

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

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

BASIC PLANNINGSHOULD INCLUDE • Wills • Revocable Living Trusts • Advanced Medical Directives (Living Wills) • Powers of Attorney

2010 2011 and 2012 2013 No estate tax* $5 Million** $1 Million*** Estate Tax : Exemption Amount Year ? - What will Congress do? *Income Tax **35% Estate Tax Rate ***55% Estate Tax Rate

Taxes are Due Nine Months After Your Death IRS MONTH 9

Current Lifetime Gifting Rates $ 13,000 Annual Exclusion 2011 and 2012 - $5 Million 2013 - $1 Million

Two Case Studies Dad Mom 2 Children

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

Assets $ 1,500,000 $ 800,000 Retirement $ 450,000 $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 +

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

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

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

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

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

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

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

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

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)

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

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

Problems (and Solutions) • Divorce • Death

By: John P. Dedon Odin, Feldman & Pittleman, P.C. 9302 Lee Highway, Suite 1100