The Importance of an The Importance of an Estate PlanEstate Plan

(In Ten Minutes or Less)(In Ten Minutes or Less)

Jeffrey O’BrienJeffrey O’Brien

Attorney at LawAttorney at Law

Mansfield Tanick & Cohen, P.A.Mansfield Tanick & Cohen, P.A.

Why Do You Need an Estate Plan?Why Do You Need an Estate Plan?

If you don’t create one, the State If you don’t create one, the State does it for you (intestate succession does it for you (intestate succession laws are the “default estate plan”); laws are the “default estate plan”); this can lead to results you don’t this can lead to results you don’t wantwant

Probate avoidance and estate tax Probate avoidance and estate tax minimizationminimization

Avoid family disputesAvoid family disputes Appoint guardians for minor childrenAppoint guardians for minor children

The Basic Estate PlanThe Basic Estate Plan

Last Will and TestamentLast Will and Testament General Durable Power of Attorney General Durable Power of Attorney

(very broad powers)(very broad powers) ““Statutory Short Form” Power of Statutory Short Form” Power of

Attorney (for financial matters)Attorney (for financial matters) Health Care Directive (your wishes Health Care Directive (your wishes

on health care matters, especially on health care matters, especially treatment of terminal conditions)treatment of terminal conditions)

What to do with the dogs (or cats)What to do with the dogs (or cats)

MN does MN does notnot allow allow trusts for petstrusts for pets

Your will requires Your will requires special language if special language if you want to you want to provide for provide for someone to take someone to take care of your pets care of your pets upon your deathupon your death

What About Trusts?What About Trusts?

Use of a Use of a revocable trustrevocable trust takes away the takes away the need to probate your estateneed to probate your estate

BUT: make sure to BUT: make sure to fundfund the trust (i.e., re- the trust (i.e., re-title your assets in the name of the trust)title your assets in the name of the trust)

Easy to transfer assets to beneficiaries of a Easy to transfer assets to beneficiaries of a trust upon death of grantortrust upon death of grantor

PrivatePrivate (probate – public proceeding (probate – public proceeding through a court)through a court)

No tax benefitNo tax benefit to a revocable trust to a revocable trust

Irrevocable Life Insurance TrustsIrrevocable Life Insurance Trusts

Life insurance proceeds are Life insurance proceeds are non-probate non-probate assetsassets

BUT: life insurance proceeds BUT: life insurance proceeds areare included included in your taxable estate for estate tax in your taxable estate for estate tax purposespurposes

Solution: irrevocable life insurance trust Solution: irrevocable life insurance trust (ILIT); after the policy/policies have been (ILIT); after the policy/policies have been in the trust for three (3) years, the death in the trust for three (3) years, the death benefits will be excluded from your benefits will be excluded from your taxable estatetaxable estate

Planning for Business OwnersPlanning for Business Owners

Nothing specific in intestacy statutes Nothing specific in intestacy statutes regarding transfers of businesses or real regarding transfers of businesses or real estateestate

Buy-sell agreements funded with life Buy-sell agreements funded with life insurance; owner dies, other owner(s) buy insurance; owner dies, other owner(s) buy his interest with life insurance proceedshis interest with life insurance proceeds

Real estate: family limited partnerships Real estate: family limited partnerships (FLPs) with gifting program (and use of (FLPs) with gifting program (and use of valuation discounts) allow transfers to valuation discounts) allow transfers to children/grandchildren free of gift taxchildren/grandchildren free of gift tax

Reviewing & Updating Your Estate Reviewing & Updating Your Estate PlanPlan

Marriage/DivorceMarriage/Divorce Death of a spouseDeath of a spouse ChildrenChildren Change in financial circumstancesChange in financial circumstances Regular review and updating of your Regular review and updating of your

plan is a plan is a mustmust in order to avoid in order to avoid unintended consequences!unintended consequences!

Our ProcessOur Process

We give you a “homework assignment” – We give you a “homework assignment” – asset information, family information, your asset information, family information, your desires as to who gets what, etc.desires as to who gets what, etc.

We review this information We review this information at no costat no cost and and give you a recommended plan and a fee give you a recommended plan and a fee quote for implementation of the planquote for implementation of the plan

We work in tandem with, not exclusive of, We work in tandem with, not exclusive of, your advisors (financial advisor, CPA)your advisors (financial advisor, CPA)

In most circumstances, we charge flat fees In most circumstances, we charge flat fees for our estate plan workfor our estate plan work

Average FeesAverage Fees Will for single person: $750.00Will for single person: $750.00

Wills for married couple which create trusts for children on parents’ death: $1,000.00Wills for married couple which create trusts for children on parents’ death: $1,000.00

Revocable trust for single person: $1,500.00Revocable trust for single person: $1,500.00

Revocable trusts for married couple: $2,500.00Revocable trusts for married couple: $2,500.00

Irrevocable Life Insurance Trusts: $1,000.00 for 1 set (husband & wife)Irrevocable Life Insurance Trusts: $1,000.00 for 1 set (husband & wife)

More complicated trusts: fees varyMore complicated trusts: fees vary

COMPARED WITH:COMPARED WITH:

AVERAGE COST OF PROBATE: $10,000.00AVERAGE COST OF PROBATE: $10,000.00

AnyAny estate plan costs less than not having one at all! estate plan costs less than not having one at all!

Ideal ReferralIdeal Referral

Mom & DadMom & Dad

YourselvesYourselves

Family, friendsFamily, friends

Questions?Questions?Thank You!Thank You!

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