1

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.

2

Family Wealth Planning

Personal Profile

1. Assets

2. Liabilities

3. Responsibilities

4. Personal choices

3

Family Wealth Planning

Form of Property Ownership

1. Individual

2. Tenancy in Common

3. Joint Tenancy (JTROS)

4. Tenancy by the Entireties

5. Community Property

6. Living Trust

4

Family Wealth Planning

Living TrustA 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

5

Family Wealth Planning

Living TrustAssets owned by TrustRevocableGrantor is Trustee and BeneficiarySuccessor TrusteeFuture IncompetencyPrivacy

6

Family Wealth Planning

Living Trust (cont.)Avoid ProbateNo Automatic Tax Savings

7

Family Wealth Planning

Effect of Contract1. Retirement plans and IRAs - N.B.

Qualified retirement plan and conventional IRA assets are subject to income taxes in addition to death taxes.

2. Life insurance3. Business and marital agreements

8

Family Wealth Planning

Wills and related issues

1. Intestacy

2. Identification of instrument, testator (rix) and domicile

3. Debts and taxes

9

Family Wealth Planning

Wills and related issues

4. Property distribution

a. Form of ownership

b. Contracts

c. Miscellaneous personal property

d. Specific bequests

e. Residuary

f. Elective share

10

Family Wealth Planning

1. Per Stirpes By right of representation Takes ancestors’ share

2. Per Capita By head Take in own right

11

Family Wealth Planning

Parent

Child 1 Child 2

Grandchild 1 Grandchild 3Grandchild 2

12

Family Wealth Planning

Wills and related issues

5. Protection of dependents and others

a. Guardianship (choice of guardian)

b. Protective trusts (choice of trustee)

c. Life insurance

d. Spendthrift provision

13

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.

1/31/3 1/3

Separate Trusts / Shares

14

Family Wealth Planning

Wills and related issues

6. Personal representative – executor (rix)

7. Fiduciary powers and duties

8. Accounting and bonding

9. Legal formalities

10. Self-proving

15

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 assetsNot really probate, but trust administration

16

Estate Administration

Collect Assets Preserve Assets Pay Debts, Expenses and Taxes Distribute Estate