I A A/B plan. See Family trust and marital trust 529 accounts, 127 Accounting, and will, 53 54 Accumulation trust, 239 Administrative fund, 73 trustee, 165 Advance directive, 99 Age-restrictions trust, 87 income and principal, 88 pros and cons, 88 Alternate/Ultimate Distribution Clause, 49 Ancillary probate, 70 Annual and lifetime gifts, to noncitizen spouses, 255 Annual exclusion, from gift taxes, 122 Annual review, of estate planning, 293 assets, 294 documents, 293 Anti-lapse law, 43 Ascertainable standards, 165 Assets, 25, 273 allocation, between spouses, 273 allotment, 210 charity, 211 family, 210 friends, 211 pets, 211 annual review of, 294 business interests, 32 cash, 29 debts and liabilities, 35 mortgages, and lines of credit, 36 private debt, 37 revolving, 37 student loans, 36 digital, 35 distribution, 212 family trust, 213 generation-sharing trust, 213 outright, 212 single-beneficiary trust, 213 division, 213 for funding trust, 203 percentage bequests, 214 specific bequests, 214 gifting, 119, 125 intangible, 34 investment, 29 life insurance, 31 loan value, 33 personal property, 27 personal share, 26 protection, 18, 78 creditors, 18, 79 limits, 82 minors, 20 predators, 19, 80 special needs, 20 for successful people, 81 real estate, 28 in-state, 28 out-of-state, 28 retirement accounts, 30 trusts, 32 valuation, 107 value, 25, 37, 273 vehicles, 34
328 Attorney, health care proxy/medical power, 100 Attorney-in-fact, 170 Attorney, power of, 95, 224 durable, 98 general, 97 immediate, 98 importance, 95, 96 incapacitated, 97 limited, 98 revoking, 99 springing, 98 Attorney, working with, 280 expectations, 282 finding, 281 payments made, 281 B Beneficiary benefit, 47 contingent, 17, 45 47 creditors before, 42 intended, 14 of irrevocable trust, 33 naming, 67 primary, 17 of revocable trust, 33 trust, 87 Black-letter law, 144 Blue-Line Provision, 51 Boilerplate, in estate plan, 52 53 accounting, waiver of, 53 alternate/ultimate Distribution Clause, 49 Blue-Line provision, 51 definitions, 49 fiduciary powers, 49 50 identity of children, 51 perpetuities, rule against, 52 small trust provision, 54 Spendthrift Clause, 50 State Law, 51 survivorship clause, 50 51 tax clause, 52 53 waiver of rights, 52 Business estate value, insuring, 243 Business interests, 32 Business-owned life insurance, 244 C Calofornia, trustee compensation in, 166 Capital gains tax, 115 Cash assets, 29 Charitable deduction, and estate tax, 109 Charitable lead trust (CLT), 150 Charitable remainder trust (CRT), 150 Charitable trust, 93 Charitable trusts, in estate planning, 150 Children and spouse, tension between, 229 inheritance, designing, 231 tax considerations, 232 Closed group, 17 Cloud. SeeInformation Security Management System (ISMS) Cloud packaging standards. See Open Virtualization Format (OVF) CLT. See Charitable lead trust (CLT) Common-pot trust, 92 Community property, 65 Conduit trust, 239 Contingent beneficiaries, 17, 45 47 Convenience account, 60 CoreLogic s Chief Economist. See Fleming, Mark Credit cards, 37 Creditors, 16, 18, 79 before beneficiaries, 42 Credit shelter trust, 85 CRT. See Charitable remainder trust (CRT) Crummey notices, 137 contributions, 139 meaning, 138 steps to follow, 138 Curtesy rights, 15 Custodial account, 127 D Death, and taxes, 104 Debts, and estate tax, 110
329 Debts, and liabilities, 35 mortgages, and lines of credit, 36 private debt, 37 revolving, 37 student loans, 36 DeSimone, Brendon short sale. See Short sale Digital assets, 35 Disclaimer, 204 advantages, 205 disadvantages, 206 effect, 204 spousal, 205 Discretionary distribution, 86 Discretionary SNT, 267 Discretionary special-needs trust, 92 Discretionary trust, 128 Disinterested trustee, 164 Dividend reinvestment (DRIP) accounts, 29 Documents, annual review of, 293 Dower rights, 15 DRIP. See Dividend reinvestment (DRIP) accounts Dynasty trust, 149 E Education loans. See Student loans Elective share right, 15 Equity investors Facebook Inc. (See Facebook) WPP plc. See WPP Estate freeze, 153 and IDGT, 147 Estate plan, 71, 95 advance directive, 99 attorney, power of, 95 importance, 95, 96 incapacitated, 97 revoking, 99 types, 97 funeral arrangements, 102 goals. See Goals, estate plan health care proxy/medical power of attorney, 100 living will, 99 organ donation, 101 skeleton structure. See Skeleton structure, of estate plan Estate plan, form of, 222 non-probate assets, 223 power of attorney, 224 will, 222 Estate planning, 1 assets. See Assets caveats and disclaimers, 6 do-it-yourself (DIY) guide, 8 location, 6 review, 8 tax law, 7 creation, 3 facts about, 1 finance reviews, 273, 274 getting started, 271 assets, 273 family treatment, 277, 278 foundation documents, 274 goals, 272 information requirements, 279 motivation, 272 skeleton framework, 275, 276 strong foundation, building from, 278, 279 working with, 280 285 goals, 267 life insurance in, 131 importance, 132 permanent insurance, 134 term insurance, 133 plan completion, 287 non-probate assets, 288 probate assets, 287 revocable trust, assets titled to, 288 review, 293 annual, 293 in-depth, 294 location, 296 working with attorney, 280 fill-in forms, 284 online services, 283
330 Estate tax, 16, 104 consequences, in gifting, 123 exemption amount, 111 portability, 112 exemption, to noncitizen spouse, 254 deferral, 249 federal estate tax, 106 assets, counted, 106 charitable deduction, 109 debts, 110 expenses, 110 marital deduction, 108 state death taxes, 110 valuation of assets, 107 inheritance tax, 113, 114 rates, 113 return, 113 state estate tax, 113 Execution, of will holographic will, 55 notary public, 55 signature, 55 witnesses, 55 Exemption amount, from federal estate tax, 111 portability, 112 Expenses, and estate tax, 110 F Fair market value (FMV), 107, 108, 121 Family business, planning guide for, 241 estate value, insuring, 243 liquidation, 242 operating, 244 legal authority, 244 practical authority, 245 tax laws, 249 section 6166 estate tax deferral, 249 special-use valuation, for farms and ranches, 250 unequal bequests to children, 246 248 Family limited liability company (FLLC), 151, 152 Family limited partnership (FLP), 151, 152 Family loans, 34 Family-owned life insurance, 243 Family treatment, and estate planning, 277, 278 Family trust, 85, 213 and marital trust, 198 and outright, 192 benefit, 85 income, 86 principal, 86 sprinkle, 86 structure add-ins, 196 198 options, 194 196 Federal estate tax, 106 assets, counted, 106 charitable deduction, 109 debts, 110 exemption amount, 111 portability, 112 expenses, 110 marital deduction, 108 state death taxes, 110 valuation of assets, 107 Federal estate tax exemption, 225 Federal estate tax law, 7 Fiduciary, 157 administrator, 158 compensation, 160 162 hiring considerations, 162 job function, 159, 160 attorney-in-fact, 170 executor, 158 compensation, 160 162 hiring considerations, 162 job function, 159, 160 guardian, 169 compensation, 169 hiring considerations, 170 job function, 169 health care proxy, 171 meaning, 157 personal representative, 158 compensation, 160 162 hiring considerations, 162 job function, 159, 160 power, 49 50
331 role, 47 48 trustee, 163 compensation, 166 hiring considerations, 168 job function, 163 Financial reviews, in estate planning, 273, 274 Financing long-term care, 261 FLLC. See Family limited liability company (FLLC) Florida, trustee compensation in, 167 FLP. See Family limited partnership (FLP) Foundation documents, 274 Franklin, Benjamin, 2 Full discretion, of trustee, 164 G Generation-sharing trust, 93, 148, 213 Generation-skipping taxes (GST), 125, 148, 199 dynasty trust, 149 generation-sharing trust, 148 Generation-skipping transfer (GST) tax, 116 working, 116 Generation-skipping trust, 92, 93 Gifting, 119 annual exclusion amount, 122 assets, 119, 125 gift tax, exemptions from, 126 income tax, and carryover basis, 120 lifetime exemption amount, 123 estate tax consequences, 123 gift tax exemption amount, 123 GST consequences, 125 making gifts, 126 pros and cons, 127 tax return, 128, 129 Gift tax exemption amount, 123 Gift tax, exemptions from, 126 Gift tax return, 128, 129 Goals, estate plan, 11 asset protection, 18 creditors, 18 minors, 20 predators, 19 special needs, 20 equal and fair distribution, 16 family members, 12 charity, 14 children, 12 daughters-in-law, 13 friends, 14 grandchildren, 13 nieces and nephews, 13 parents, 13 partner, 12 pets, 14 siblings, 13 sons-in-law, 13 spouse, 12 responsibilities, 14 creditors, 16 spouse, 15 Uncle Sam, 16 short term, 21 values, 21 disincentive, 22 legacy establishment, 21 wishes, 23 Goals, for estate planning, 272 Governance. See Security and governance Grantor, 72, 78 of irrevocable trust, 33 of revocable trust, 32 Grantor retained annuity trust (GRAT), 145, 146, 225, 279 Grantor trust, 146 GRAT. See Grantor retained annuity trust (GRAT) GST. See Generation-skipping tax (GST) GST tax. See Generation-skipping transfer (GST) tax Guaranteed insurance. See Permanent insurance Guardian, 169 compensation, 169 hiring considerations, 170 job function, 169 Guardian, of minor children, 226 Guardianship, 97
332 H Hardship distribution, 255 Health care proxy/medical power of attorney, 100 Health care representative, 171 I IDGT. See Intentionally defective grantor trust (IDGT) ILIT. See Irrevocable life insurance trust (ILIT) Income-producing trust, 234 Income tax, 114 capital gains tax, 115 and carryover basis, 120 and inheritances, 114 payment, 147 In-depth review, of estate planning, 294 Indirect gift, 129 Information requirements, in estate planning, 279 family information, 279 financial information, 280 Information Security Management System (ISMS). See Statement on Audit Standard No. 70 (SAS 70) Inheritance, designing, 173 Seealso Spectrum of inheritance design, 175 Inheritances, and income tax, 114 Inheritance tax, 104, 113, 114 Installment sales, 154 Insurance, reasons for, 135 Insurance trusts, 128, 131 changing title, 140, 141 Crummey notices, 137 contributions, 139 meaning, 138 steps to follow, 138 ILIT, 136, 141 insurance, reasons for, 135 life insurance, 131 importance, 132 permanent insurance, 134 term insurance, 133 Intangible assets, 34 Intended beneficiaries, 14 Intentionally defective grantor trust (IDGT), 146 estate freeze, 147 income tax payment, 147 Interested trustee, 165 Internet standards. See Networks Inter-vivos trust, 72, 83 Intestacy laws, 3 Investment assets, 29 Investment trustee, 165 Irrevocable life insurance trust (ILIT), 136, 137, 141, 225, 240, 243, 256, 270, 290 Irrevocable trust, 84 beneficiary of, 33 grantor of, 33 J Joint accounts, 290 Joint ownership, 60 community property, 65 JTWROS, 60 convenience account/specific bequest, 60 married couples, 62 unmarried couples, 62 TBE, 63 TiC, 63 Joint Tenants with Rights of Survivorship (JTWROS), 60 convenience account/specific bequest, 60 married couples, 62 unmarried couples, 62 JTWROS. See Joint Tenants with Rights of Survivorship (JTWROS) K Kids, planning guide for, 173 disinheriting child, 186 great divide, 174 inheritance, designing, 173
333 L leaving assets, to children, 173 spectrum of inheritance design, 175 distribution, 177 dividing income and principal, 179 lifetime trust with child as trustee, 180 multiple age distributions, 179 outright at 18, 175 third-party control, trust for life with, 176 withdrawal right, instead of outright distribution, 179 treatment, 182 equalization, 185 non-probate assets, 183 specific bequests, 184 Last Will and Testament, 41 Leaving assets, to parents, 262 Legacy establishment, 21 Legal authority, on family business, 244 Legal obligations, in estate plan, 261 Life insurance, 31, 243, 273, 290 business-owned, 244 family-owned, 243 partner-owned, 244 Life insurance, in estate planning, 131 importance, 132 permanent insurance, 134 term insurance, 133 Lifetime exemption amount, in gifting, 123 estate tax consequences, 123 gift tax exemption amount, 123 GST consequences, 125 Lifetime trust, 73, 89 control, 89 pros and cons, 89 Limited discretion, of trustee, 164 Liquidation, of family business, 242 buy-sell agreement, 242 employee purchase, 243 family succession planning, 243 friendly competitor/key customer, 243 value, 242 Living trust. See Revocable trust Living will, 99 Loan value, 33 Long-term care, financing for, 261 M Mandatory income distribution, 86 Marital deduction, 189 grabbing, 191 and estate tax, 108 Marital trust, 86 add-ins, 202 5x5 power, 203 power of appointment, 203 trustee, 202 options, 200 benefit and control, 201 characteristics, 201 and family trust, 198 in second marriages, 233 income, 234 principal, 234 trustee, 236 unitrust, 236 Married, planning guide for, 189 disclaimer, 204 marital deduction, 189 grabbing, 191 portability, 207 skeleton structure, designing, 192 family trust and marital trust, 198 family trust and outright, 192 outright, 192 trust, funding, 203 Medicaid, 261, 262, 266, 268 Minor children, guardian of, 226 Minors, 20 Money, and trust, 82 Moral obligations, in estate plan, 261 Mortgages, 36 Mulville, John amortization table. See Amortization Murphy s Law, 44
334 N Needs-based benefits, of SNT, 266 Network. See Storage and network New York, trustee compensation in, 166 No-contest clause, 218 Noncitizens, planning guide for, 253 annual and lifetime gifts, 255 noncitizen spouse, estate-tax exemption to, 254 planning alternatives, 256 gifting, 257 ILIT, 256 illiquid assets, 257 unitrust, 257 US citizen, 257 QDOT, 254 tax treaties, 256 Noncitizen spouse, estate-tax exemption to, 254 Non-probate assets, 40, 183, 288 joint accounts, 290 life insurance, 290 pay-on-death accounts, 292 retirement plan beneficiary designations, 288 Non-probate assets annual review of, 294 in estate plan, 223 joint tenants, with rights of survivorship, 223 pay-on-death accounts, 224 retirement accounts, 224 O Online services, for estate planning, 283 Open group, 17 Organ donation, 101 Out-of-state real estate, 274 Outright gift, 127 P Parents, planning guide for, 259 financing long-term care, 261 leaving assets, 262 legal obligations, 261 shifting care relationship, 260 tax burden, 259 tax considerations, 262 Partner-owned life insurance, 244 Pay-on-death (POD) accounts, 65, 224, 292 Perpetuities, rule against, 52 Peripheral interface standards. See Advanced Technology Attachment (ATA) Permanent insurance, 134 Personal property, 27, 274 and will, 42 Personal share, of assets, 26 POD account. See Pay-on-death (POD) account Portability, 207 Pourover will, 69 Power of attorney. See Attorney, power of Practical authority, on family business, 245 Predators, 19, 80 Prenuptial agreement, 237 Primary beneficiaries, 17 Private debt, 37 Probate assets, 40, 287 avoidance, 59 avoidance and privacy, 274 process, 58 Public standards organizations. See Standards-developing organization (SDO) Pull the plug authorization, 99 Q QDOT. See Qualified domestic trust (QDOT) QPRT. SeeQualified personal residence trust (QPRT) QTIP trust. See Qualified terminable interest property (QTIP) trust Qualified domestic trust (QDOT), 254 Qualified interest, 144 Qualified personal residence trust (QPRT), 144, 145, 279
335 Qualified terminable interest property (QTIP) trust, 86, 126, 191 R RAP. See Rule against perpetuities (RAP) Real estate, 28 in-state, 28 out-of-state, 28 Real estate, in multiple jurisdictions, 70 Real estate investment trusts (REITs), 29 Regulators Morgan Stanley. See Morgan Stanley REITs. See Real estate investment trusts (REITs) Remote Procedure Call (RPC). See Simple Object Access Protocol (SOAP) Retained interest, 144 Retirement accounts, 30, 114, 224, 238, 273 accumulation trust, 239 conduit trust, 239 Retirement plan beneficiary designations, 288 Revocable trusts, 39, 68, 83, 97 anatomy, 72 blueprint, 72 boilerplate, 75 successors, 74 terminology, 72 trustees, 74 will substitute, 72 assets titled to, 288 beneficiary of, 33 grantor of, 32 vs. will, 69 Rule against perpetuities (RAP), 150 S Same-sex couples, planning guide for, 221 estate plan, form of, 222 non-probate assets, 223 power of attorney, 224 will, 222 funeral arrangements, 226 minor children, guardian of, 226 state and federal law, disconnect of, 222 tax-minimization strategies, 225 Second marriages, planning guide for, 229 children and spouse, tension between, 229 inheritance, designing, 231 tax considerations, 232 governing documents, 237 ILIT, 240 marital trust, 233 income, 234 principal, 234 trustee, 236 unitrust, 236 retirement accounts, 238 Security and governance. See Information Security Management System (ISMS) Selling underwater home, short sale. See Short sale Service level objective (SLO). See Service level target (SLT) Service Virtualization (SV) virtual service. See Virtual service Settlor, 72. See also Grantor Short term goals, 21 Single-beneficiary trust, 87, 213 age-restrictions, 87 income and principal, 88 pros and cons, 88 charitable, 93 common-pot, 92 generation-skipping, 92 lifetime, 89 control, 89 pros and cons, 89 power of appointment, 93 general, 94 inter-vivos, 94 limited, 93 testamentary, 94 SNTs, 90 Single-purpose trust, 128
336 Singles, planning guide for, 209 allotment of assets, 210 charity, 211 family, 210 friends, 211 pets, 211 distribution of assets, 212 family trust, 213 generation-sharing trust, 213 outright, 212 single-beneficiary trust, 213 division of assets, 213 percentage bequests, 214 specific bequests, 214 special tax issues, 215 will contest, reasons, 216 will contest, risk of, 216 people to contest, 218 prevention, 218 Skeleton framework, of estate plan, 275, 276 Skeleton structure, of estate plan, 192 family trust and marital trust, 198 family trust and outright, 192 outright, 192 Small trust provision, 54 SNTs. See Special-needs trusts (SNTs) Social Security Disability (SSD), 269 Special-needs beneficiary, trust for, 267 Special-needs children, planning guide for, 265 planning recommendations, 269 guardianship, 270 ILIT, 270 unequal distribution, 269 recognition, 265 SNT, 266 discretionary, 267 needs-based benefits, 266 statutory, 268 Special-needs trust (SNTs), 90, 266 discretionary, 267 needs-based benefits, 266 statutory, 268 Special tax issues, 215 Spectrum of inheritance design, 175 distribution, 177 dividing income and principal, 179 lifetime trust with child as trustee, 180 multiple age distributions, 179 outright at 18, 175 third-party control, trust for life with, 176 withdrawal right, instead of outright distribution, 179 Spendthrift Clause, 50 Spousal disclaimer, 205 Sprinkle trust, 85, 86 SSD. See Social Security Disability (SSD) SSI. See Supplemental Security Income (SSI) State and federal law, disconnect of, 222 State death taxes, 110, 113 State Law, 51 Statutory SNT, 268 restrictions on, 269 Statutory special-needs trust, 91 Storage standard. See Cloud Data Management Interface (CDMI) Storage standards. See Peripheral interface standards Student loans, 36 Subtrusts, 74 Supplemental Security Income (SSI), 266 Survivorship Clause, 50 51 T Tax Act (2001), 114, 123 Tax Act (2010), 112, 207 Tax-allocation clause, 215 Tax burden, 259 Tax clause, 52 53 Tax considerations, 232 Tax considerations, in estate plan, 262 Taxes, 103 and death, 104 estate, 104 GST tax, working, 116 importance, 103 income tax, 114 and inheritances, 114 capital gains tax, 115 inheritance, 104 Tax laws, for singles. See Singles, planning guide for
337 Tax laws, for family business, 249 section 6166 estate tax deferral, 249 special-use valuation, for farms and ranches, 250 Tax-minimization strategies, 225 Tax realization event, 104 Tax savings, 204 Tax strategies, in estate planning, 143 CRT/CLT, 150 FLP/FLLC, 151 GRAT, 145, 146 GST trusts, 148 dynasty trust, 149 generation-sharing trust, 148 IDGT, 146 estate freeze, 147 income tax payment, 147 installment sales, 154 loans, 153 QPRT, 144, 145 tax planning, 155 Tax treaties, to noncitizen spouses, 256 Tenants by the entireties (TBE), 63 Tenants in common (TiC), 63 Term insurance, 133 Testamentary trust, 72, 83 Third-party control, trust for life with, 176 TiC. See Tenants in common (TiC) Transfer-on-death (TOD) account, 65 Trust, 77 asset protection, 78 creditors, 79 for successful people, 81 limits, 82 predators, 80 beneficiary, 78 definition, 77 discretionary special-needs, 92 family, 85 benefit, 85 income, 86 principal, 86 sprinkle, 86 funding, 203 grantor, 78 income, 84 inter-vivos, 83 irrevocable, 84 marital, 86 and money, 82 principal, 84 revocable, 83 single-beneficiary, 87 age-restrictions, 87 charitable, 93 common-pot, 92 generation-skipping, 92 lifetime, 89 power of appointment, 93 SNTs, 90 for special-needs beneficiary, 267 statutory special-needs, 91 testamentary, 83 triangle, 78 trustee, 78 Trustee, 78, 163 compensation, 166 hiring considerations, 168 job function, 163 administrative trustee, 165 disinterested trustee, 164 full/limited discretion, 164 interested trustee, 165 investment trustee, 165 trust protector, 166 of marital trust, 236 Trustor, 72. See also Grantor Trusts, 32 leaving assets in, 262, 263 income, 263 principal, 263 trustee, 263 ultimate beneficiaries, 263 powers, 158 protector, 166 trustee of, 33 U UGMA. See Uniform Gift to Minors Account (UGMA)
338 Underwater mortgages DeSimone, Brendon. See DeSimone, Brendon Mulville, John. See Mulville, John Unequal bequests, to children, 246 248 Uniform Gift to Minors Account (UGMA), 127 Uniform Transfers to Minors Account (UTMA), 127 Unitrust, 182 Unitrust, marital trust as, 236 Universal Resource Locator (URL). See Universal Resource Identifier (URI) Unmarried couples, planning guide for, 221 estate plan, form of, 222 non-probate assets, 223 power of attorney, 224 will, 222 funeral arrangements, 226 minor children, guardian of, 226 state and federal law, disconnect of, 222 tax-minimization strategies, 225 US tax code, 103, 254, 256 UTMA. See Uniform Transfers to Minors Account (UTMA) V Valuation discounts, 151 Valuation, of assets, 107 Value, of assets, 25, 273 Value, of estate, 37 Values, in estate plan disincentive, 22 legacy establishment, 21 wishes, 23 Variable insurance. See Permanent insurance Voluntary foreclosure. See Lieu of foreclosure W, X, Y, Z Wait-and-See approach, 204 Whole life insurance. See Permanent insurance Will, 57 beneficiary benefit, 47 naming, 67 joint ownership, 60 community property, 65 JTWROS, 60 TBE, 63 TiC, 63 boilerplate definitions, 49 Perpetuities, rule against, 52 Spendthrift Clause, 50 Alternate/Ultimate Distribution Clause, 49 fiduciary powers, 49 50 State Law, 51 Blue-Line Provision, 51 waiver of rights, 52 tax clause, 52 53 accounting, waiver of, 53 54 small trust provision, 54 identity of children, 51 52 Survivorship Clause, 50 51 control, 40 exection, 54 56 fiduciaries role, 47 48 POD account, 65 probate avoidance, 59 probate process, 58 revocable trusts, 68 vs. revocable trusts, 69 anatomy, 72 structure creditors, before beneficiaries, 42 Last Will and Testament, 41 personal property, 42 residuary, 44 specific bequests, 43 44 tools, 75 Will, and estate plan, 222 Will contest, 216 people to contest, 218 prevention, 218 reasons, 216