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Family Wealth Planning. FWP is an extremely broad topic. It has been defined as the accumulation, conservation, and distribution of wealth. The practice of estate planning is broader than this definition and reaches the personal life of the client, the client’s family and business.
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Family Wealth Planning • FWP is an extremely broad topic. It has been defined as the accumulation, conservation, and distribution of wealth. The practice of estate planning is broader than this definition and reaches the personal life of the client, the client’s family and business.
Family Wealth Planning • Personal Profile • Assets • Liabilities • Responsibilities • Personal choices
Family Wealth Planning • Form of Property Ownership • Individual • Tenancy in Common • Joint Tenancy (JTROS) • Tenancy by the Entireties • Community Property • Living Trust
Family Wealth Planning • Living Trust A will substitute in which an individual transfers assets into a revocable trust and usually remains as trustee and beneficiary. At death the assets are managed/ distributed according to the terms of the trust. There are NO greater tax benefits than those available using a tax planned will. Assets in a living trust are not subject to probate. Probate is usually a simple process in PA and NJ
Family Wealth Planning • Living Trust • Assets owned by Trust • Revocable • Grantor is Trustee and Beneficiary • Successor Trustee • Future Incompetency • Privacy
Family Wealth Planning • Living Trust (cont.) • Avoid Probate • No Automatic Tax Savings
Family Wealth Planning • Effect of Contract • Retirement plans and IRAs - N.B. Qualified retirement plan and conventional IRA assets are subject to income taxes in addition to death taxes. • Life insurance • Business and marital agreements
Family Wealth Planning • Wills and related issues • Intestacy • Identification of instrument, testator (rix) and domicile • Debts and taxes
Family Wealth Planning • Wills and related issues • Property distribution • Form of ownership • Contracts • Miscellaneous personal property • Specific bequests • Residuary • Elective share
Family Wealth Planning 1. Per Stirpes • By right of representation • Takes ancestors’ share 2. Per Capita • By head • Take in own right
Family Wealth Planning Parent Child 1 Child 2 Grandchild 1 Grandchild 2 Grandchild 3
Family Wealth Planning • Wills and related issues • Protection of dependents and others • Guardianship (choice of guardian) • Protective trusts (choice of trustee) • Life insurance • Spendthrift provision
Family Wealth Planning Pot Trust (3 children) • Inc. & Prin. for benefit of all • When youngest reaches 23 • split into three shares / trusts • Issue of advancements • Terms of shares / trusts v. Separate Trusts / Shares 1/3 1/3 1/3
Family Wealth Planning • Wills and related issues • Personal representative – executor (rix) • Fiduciary powers and duties • Accounting and bonding • Legal formalities • Self-proving
Estate Administration • Decedent’s Personal Representative • executor/executrix • letters testamentary • administrator/administratrix • letters of administration • CTA (cum testimonium annexum) • trustee of living trust • Trust already owns the assets • Not really probate, but trust administration
Estate Administration • Collect Assets • Preserve Assets • Pay Debts, Expenses and Taxes • Distribute Estate