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Estate Planning 101

Estate Planning 101. Wills, Trusts and Powers of Attorney Peter King HAUSWIESNER KING LLP February 21, 2007. Will. Legal declaration of person's wishes regarding disposition of his or her property or estate after death. Why a will?. Property Distribution Reduce Taxes Name Fiduciaries

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Estate Planning 101

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  1. Estate Planning 101 Wills, Trusts and Powers of Attorney Peter King HAUSWIESNER KING LLP February 21, 2007 HAUSWIESNER KING LLP

  2. Will • Legal declaration of person's wishes regarding disposition of his or her property or estate after death HAUSWIESNER KING LLP

  3. Why a will? • Property Distribution • Reduce Taxes • Name Fiduciaries • Allows executor • Designates individuals as guardians for children • Waives security on bond • Provides for disabled family member HAUSWIESNER KING LLP

  4. Trust • A fiduciary relationship with respect to property, in which the trustee holds property for the benefit of another person (the beneficiary). HAUSWIESNER KING LLP

  5. Trust Advantages • Avoid Probate • Funded living trust avoids having assets included in the grantor’s probate estate • Avoids delay of probate and reduces expenses • Privacy • No public record; avoids publicizing asset value • Easier Management During Incapacity • Tax Savings HAUSWIESNER KING LLP

  6. Trust Types • Revocable v. Irrevocable • Grantor v. Non-Grantor • Living v. Testamentary • Funded v. Unfunded HAUSWIESNER KING LLP

  7. Revocable v. Irrevocable • Revocable Trust: Settlor retains right to alter, amend or revoke trust and re-acquire assets • Irrevocable Trust: Settlor cannot revoke but may retain power to make investment decisions and control distribution of income and principal to beneficiaries (Relinquishing all rights may be better for estate tax purposes) HAUSWIESNER KING LLP

  8. Grantor v. Non-Grantor • Grantor: Settlor retains certain rights or powers over trust, will be taxed on income generated • Non-Grantor: Settlor gives up any right to income and most discretionary powers; trust becomes separate entity for tax purposes HAUSWIESNER KING LLP

  9. Living v. Testamentary • Living • Trust created during settlor’s lifetime • In Virginia trustee is not required to file annual accountings with the commissioner of accounts unless required to do so by instrument or court order • Testamentary • Trust is created under a testator’s will • Trustee is required to file accountings with commissioner of accounts unless decedent directs accountings are not required HAUSWIESNER KING LLP

  10. Funded v. Unfunded • Funded: Property from settlor’s estate is placed in trust • Unfunded: Trust is set up without any property in it. The property “pours over” from a clause in the pour-over will HAUSWIESNER KING LLP

  11. Common Trusts • Bypass Trust • Qualified Terminable Interest Property Trust (QTIP) • Special Needs Trusts • Pet Trust • Spendthrift Trusts • Irrevocable Life Insurance Trusts • Charitable Remainder Trusts HAUSWIESNER KING LLP

  12. Trust Alternatives • Uniform Transfers to Minors Act • Uniform Custodial Trust Act • POD Bank Accounts, Savings Accounts, US Savings Bonds, TOD Investments • Family Limited Partnerships HAUSWIESNER KING LLP

  13. Powers of Attorney • Durable Power of Attorney • Principal authorizes agent (attorney-in-fact) to act on his/her behalf in the event of disability or incapacity • Advanced Medical Directive (Medical Power of Attorney) • Specifies desires during a terminal illness where death is imminent • Allows principal to designate agent to make health care decisions if incapacitated or disabled • Indicates procedures principal authorizes agent to withhold and withdraw HAUSWIESNER KING LLP

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