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Introduction to Estate Planning

Introduction to Estate Planning. Joe Botta Virginia Cooperative Extension Prince William Office. What Is An Estate?. All the property you own. What is Estate Planning?. Deciding the distribution of your property in anticipation of your death While you are alive After you die

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Introduction to Estate Planning

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  1. Introduction to Estate Planning Joe Botta Virginia Cooperative Extension Prince William Office

  2. What Is An Estate? • All the property you own

  3. What isEstate Planning? • Deciding the distribution of your property in anticipation of your death • While you are alive • After you die • Protecting your assets • Minimizing family turmoil

  4. Objectives in Estate Planning • Reduce unnecessary costs • Minimize estate and gift taxes • Treat children equitably • Provide for parents, children, heirs • Continue the family business • Allow gifts to charitable organizations

  5. Who Should Be Involved? • Spouse • Family • Business partners • Professionals • Attorney • Certified Public Accountant (CPA) • Bank Trust Officer • Certified Financial Planner • Chartered Life Underwriter (CLU)

  6. The Probate Process • Collection, inventory, and appraisal of all assets that are subject to probate • Payment of taxes and creditors • Allow discretion • Formal transfer of estate property according to the Will, or by the state laws of intestate succession, if there is no Will

  7. No Will ? Code of Virginia Decides First

  8. If Code of Virginia Decides

  9. Approach to Estate Planning • Organize records • Conduct a financial assessment • Assets, liabilities, income, & expenses • Write letter of instruction • List of contacts, account numbers • Location of documents • Communicate • Family, executor, heirs

  10. Major Tools • Will, Power of Attorney, Advance Medical Directive • Titling of property • Gifting Strategies • Trusts • Insurance products

  11. Your Will • You decide to whom to distribute property • You decide who is appointed guardian of minor children • You appoint an Executor • Becomes public information at your death • Will Management • Have 2 or 3 copies made • Keep in safe place (several places) • Tell family members • Update periodically

  12. Common Executor’s Tasks • Locate & probate will • Inventory assets • Manage assets to conserve their value • Pay and keep records of estate expenses • Distribute assets according to will

  13. Durable Power of Attorney • Your legal designate acts on your behalf should you become incapacitated • Much care needed in selection • Much trust needed in person selected

  14. Advance Medical Directive – “Living Will” • Your wishes regarding prolonging your life by artificial or extraordinary means • Removes burden from your family

  15. Titling Property • Sole Ownership • Joint Tenancy • Tenancy by the Entirety • Tenancy in Common

  16. Gifting Strategies • Annual Gift Tax Exclusion • $11,000/donee per year • $22,000/donee for a married couple (split gift) • Must gift “present interest” to qualify • Unlimited gifts to spouse (US) • If gift results in gift tax, donor pays • Pay tax by April 15 of following tax year, or • Include part of your lifetime unified credit

  17. Trusts • “Empty Buckets” • Must be “filled” (funded) • Living • Not public information • Testamentary • Requires will be probated • Revocable • Irrevocable

  18. Insurance Products • Insurance is not a substitute for estate planning • Can be a good tool in estate planning • Provide cash to pay taxes & expenses • Provide support for your dependents • Leave a sizable estate • Irrevocable Life Insurance Trust • Get legal advice!

  19. Working WithYour Attorney • Be prepared BEFORE you meet with your attorney • Gather necessary information • Copies of current will, POA, AMD • Balance sheet & recent tax returns • List of all insurance policies • Deeds & titles for all real property

  20. Think Through Your Goals • Know your goals before you meet with your attorney • Save time and money • Determine whom you want to get what! • Personal property, general bequests • Disinheritances • Residue and donations • Executors, guardians, and trustees

  21. Personal Info • For you, spouse, kids, and other potential beneficiaries • Full name, date of birth, Social Security number, health issues • Note any adopted children • List of prior marriages and children from prior marriages

  22. When to Review Your Estate Plan • Major life events • Marriage, births, divorces, deaths • Inheritances • Career changes • Moves out of state • Tax law changes • Significant changes in estate values • Every 2-3 years, regardless

  23. Summary • Start early • Provides more options • Communicate • Think through your goals & desires • Get legal advice • Update your estate plan regularly • Get legal advice!

  24. Your Personal Note A written note from you to your children • What good things do you remember about them • What good things do you want them to know about you • Tell them you love them & why

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