ESTATE PLANNING

Estate planning is an efficient and seamless way to provide peace of mind in the event of the unexpected tomorrow or years from now. Estate planning is especially important for parents with young children, blended families, or those facing potentially taxable estates. In addition to providing your loved ones with direction in the most difficult of times, estate planning is also an effective and easy way to ensure that charitable wishes and desires are accomplished in the future. Charitable giving is a wonderful way to leave a legacy in the weeks, months, and even years after a death. Whether its an upfront dollar amount, a percentage of the estate, or a fund or endowment to benefit generations, the possibilities for charitable giving are endless. In addition to the tax benefits that often stem from charitable giving, those who incorporate charitable giving into their estate plans are sure to gain personal satisfaction knowing that their favorite organizations will benefit from their generosity after they are gone. Regardless of your motives, it is never too early to plan ahead. Nell & Associates, S.C. would be happy to assist you in your estate planning needs. Call, email or visit our website today for more information!

ESTATE PLANNING OVERVIEW 1. A Standard Estate Plan a. Will i. Who needs one? 1. Its never a bad idea to have a will ii. Basic Components of a Will 1. Identify Beneficiaries & How Estate is Divided 2. Specify ages of distribution, if applicable a. Done through a testamentary trust in will 3. Name an Executor/Personal Representative a. An executor is the individual responsible for admitting a will to probate and overseeing estate administration process (often along with help of attorney) b. An executor has no legal authority while grantor (one who creates will) is alive

b. Durable Power of Attorney for Healthcare i. Appoints an agent to make medical decisions on your behalf ii. Agents authority effective only after 2 physicians determine incapacity iii. Can be as specific or general as you wish iv. What happens if you dont have a healthcare POA 1. Need for guardianship can arise c. Durable Power of Attorney for Finances & Property i. Appoints an agent to manage all things financial (i.e. investments, bank accounts, safety deposit boxes, etc.) and real estate ii. Can be designed to be effective immediately or effective upon incapacity iii. What happens if you dont have a financial POA 1. Need for guardianship 2. Probate a. What is it? i. Probate is the legal process by which title to property is transferred to heirs by a court b. Probate Assets i. Assets held in a decedents name alone with no beneficiary or P.O.D. designation (i.e. bank accounts only in decedents name; real estate solely owned in decedents name or as tenants in common, etc.) c. Non-Probate Assets i. Assets transferred by terms of document creating non-probate status (i.e. P.O.D. accounts; real estate held in joint tenancy with rights of survivorship; retirement accounts with beneficiary designations; assets held in trust, etc.) d. Admitting a Will to Probate i. Having a will does not avoid the need for probate ii. To the contrary, a will is needed to give direction to the probate court iii. The will must be probated to be effective iv. Beneficiary designations and asset titling trump will language e. Alternative forms of Court Administration for Probate Estates less than $50,000 i. Transfer by Affidavit ii. Summary Assignment iii. Summary Settlement f. Costs of Probateshould it be avoided? 3. Use of Trusts in Estate Planning a. Living Trusts i. Assets transferred to trust during life of grantor ii. Can be revocable or irrevocable
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1. Revocable living trusts generally do not enable grantor to avoid estate taxes or income taxes 2. Irrevocable living trusts generally can reduce estate taxes and individual income taxes (not always a good idea) 3. Assets held in living trusts avoid probate b. Testamentary Trusts i. Funded upon death of grantor 1. Common purposes are to minimize estate taxes and provide for long-term distributions 4. Estate Tax Overview a. Federal Estate Taxes i. $5,120,000 estate exemption (unless Congress acts) 1. Ex. $5,800,000 Gross Estate -$5,120,000 Exemption $680,000 Taxable Estate (55% top rate) 2. It is predicted that the estate exemption for 2013 will be $1,000,000, with any taxable estate being taxed at 55% unless Congress acts differently ii. The Gross Estate 1. 2031 IRC the valueof all property, real or personal, tangible or intangible, wherever situated. 2. Includes probate and non-probate assets; 2033 IRC the value of all property in which the decedent had an interest at the time of his or her death b. Wisconsin Estate Taxes i. No estate tax, inheritance tax or tax paid by a recipient of a gift c. Taking Advantage of the Unlimited Marital Deduction i. Unlimited marital deduction on property passing outright to citizen spouse or certain types of trusts 1. Example: a. H&W have $3,000,000 joint estate i. H dies with $1,500,000 gross estate ii. H leaves entire estate to W iii. Results in $0 in estate tax ii. Results in $0 in estate taxes due on first death, but wastes estate tax exemption of 1st spouse to pass 1. Example: a. H&W have $3,000,000 joint estate i. H dies with $1,500,000 gross estate
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H leaves entire estate to W Results in $0 in estate tax on Hs death W dies later with $3,000,000 gross estate $3,000,000 Gross Estate - 1,000,000 Exemption $2,000,000 Taxable Estate (55% top rate) iii. Estate tax exemption of 1st spouse to pass can be maximized through use of bequests which do not qualify for marital deduction (outright to children; to credit shelter trust [surviving spouse is beneficiary but doesnt have enough control to be owner]) 1. Example: a. H&W have $3,000,000 joint estate i. H dies with $1,500,000 gross estate ii. H leaves $1,000,000 to credit shelter trust and $500,000 to W outright iii. Results in $0 in estate tax on Hs death iv. W dies later with $2,000,000 gross estate (W is not considered to be owner of credit shelter trust) v. $2,000,000 Gross Estate - 1,000,000 Exemption $1,000,000 Taxable Estate (55% top rate) 5. Long-Term Care Issues a. Medicare i. Covers 100 days of long-term care in a skilled nursing facility b. Medicaid i. Deficit Reduction Act of 2005 1. Brought about significant changes to divestment rules c. Paying for long-term care i. Medicaid ii. Long-term Care Insurance iii. Private Paylikely most common 6. Estate Planning Wrap-Up a. Proper Estate Planning will maximize bequests to family, friends, pets and charitable organizations b. Poor Estate Planning will maximize taxes to the state and federal government

ii. iii. iv. v.

Nell & Associates, S.C. | Attorney Richard E. Nell | www.nellandassociates.com

ESTATE PLANNING QUESTIONNAIRE Our estate planning services are expansive and include providing wills, trusts, healthcare and financial powers of attorney, probate assistance, Medicaid and long-term care planning services, and guardianship services for our clients. The following is just an example of the information we require from clients to begin the process of long-term planning.
PERSONAL AND FAMILY INFORMATION Personal Info Full Name Other Names (maiden, alias,
nicknames)

Husband

Wife

Occupation (if retired, list former

occupation and check box)

Date of Birth Place of Birth Citizenship Social Security Number Date and Place of Marriage

Address & Telephone Info Home County: EmployerHusband EmployerWife Other Telephone Numbers

Address

Telephone Number

Cellular: ___________________ Pager: ___________________

Email Address

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Send mail to:

____ Home

____ Husbands Business

____ Wifes Business

____ Other Address: _______________________________________ Name of Accountant: Name of Other Lawyer: Name of Financial Planner: Bank/Banker: ________________________________________________ ________________________________________________ ________________________________________________ ________________________________________________

What is your primary motive for considering estate planning? (select one or more) ____ Probate Avoidance ____ Business Planning ____ Federal Estate Planning Husband Yes Any prior marriage(s)? Any children by prior Marriage(s)? Any children out of wedlock? Prior military service? Were you adopted? Have (either of) you ever consented to the adoption by another of any child of yours? Do (either of) you own real estate or personal property located in another state? Do you have a written marital agreement (prenuptial or postnuptial)?
If yes, please bring a copy of the document to our initial conference.

____ Guardianship for minor children ____ Other: ____________________

Wife No Yes No

Have either of you ever lived in or own(ed) property in Arizona, California, Idaho, New Mexico, Texas, or Washington? (if yes, indicate which states) When did you establish your Wisconsin residency? Nell & Associates, S.C. | Attorney Richard E. Nell | www.nellandassociates.com 6

Do any of your children or other beneficiaries have disabilities? Do you have an existing trust document? If yes, please bring a copy of the
document to our initial conference.

Do you have long-term care insurance?

Parents Husbands parents (indicate date of death if deceased) Name Address __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ Telephone Age __________________________ __________________________ __________________________ __________________________

Wifes parents (indicate date of death if deceased) Name Address __________________________ __________________________ __________________________ __________________________ __________________________ __________________________ Telephone Age Children Full Name Date of Birth Marital Status Address (if living away from home) Telephone (if away from home) Is this child presently supported by you? Yes_____ No_____ Yes_____ No_____ __________________________ __________________________ __________________________ __________________________ No. 1 No. 2

Nell & Associates, S.C. | Attorney Richard E. Nell | www.nellandassociates.com

Grandchildren Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. *Please attach additional pages if necessary to identify additional children or grandchildren. Is financial support furnished or anticipated to be furnished: to your parents? to anyone besides your children? GIFT HISTORY Type of Gift 1. 2. 3. Date Value _______ Yes _______ Yes ______ No ______ No Parent Date of Birth

Nell & Associates, S.C. | Attorney Richard E. Nell | www.nellandassociates.com

SCHEDULE OF ASSETS & LIABILITIES Cash, Bank Accounts, Money Market Funds, Treasury Bills, and Certificates of Deposit (not including IRAs and retirement plans) Type of Account (checking, savings, CD, etc.) How Titled? (husband, wife, or both) Amount

Name of Institution

Total

Mutual Funds (not including IRAs and retirement plans) How Titled? Name of Institution (husband, wife, or both) Amount

Total

Stocks How Titled? Company/Fund (husband, wife, or both) No. of Shares Approximate Value

Total

Nell & Associates, S.C. | Attorney Richard E. Nell | www.nellandassociates.com

Bonds (including U.S. Savings Bonds) How Titled? Company/Name (husband, wife, or both) No. of Shares Approximate Value

Total

Real Estate Owner Address (husband, wife, or both) Type*/Year Acquired Approximate Value Present Mortg. Balance

* R=residence S=seasonal residence or vacation home O=investment or other real estate Business Interests

Business No. 1 Name of Business Sole proprietorship, Partnership (general or limited), Liability Company, or Corporation (C or Sub S) Principal Business Activity Percent of Ownership Approximate Value of Your Interest

Business No. 2

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Life Insurance Company Policy Number Type of Policy (whole life,

variable, universal, or term)

Policy No. 1

Policy No. 2

Policy No. 3

Insured Person Policy Owner Beneficiary Face Amount Cash Value Outstanding Loan

Annuities

No. 1 Company Contract Number Annuitant Owner Beneficiary Basis (original value) Current Value Outstanding Loan

No. 2

No. 3

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Pension, Profit-Sharing and Retirement Benefits - Husband Estimated Income or Lump Sum Payment

Amount Vested, Contributed, Deferred Company Pension Profit-Sharing Deferred Compensation Self-Employment Retirement Plans, IRAs Social Security 401ks

Death Benefit

Pension, Profit-Sharing and Retirement Benefits - Wife Estimated Income or Lump Sum Payment

Amount Vested, Contributed, Deferred Company Pension Profit-Sharing Deferred Compensation Self-Employment Retirement Plans, IRAs Social Security 401ks

Death Benefit

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Personal Effects

Asset Automobiles Boats Motorcycles Household Furnishings Jewelry Antiques/Collectibles Others

Owner

Estimated Value

Total

Liabilities

Type Bills, Charge Cards, etc. Bank Loans (not including mortgages on real estate previously listed) Other Liabilities

Approximate Amount

Total

Are either of you the guarantor of any loans of another?

_____ Yes

_____ No

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APPOINTMENTS Personal Representative The will should name a personal representative to probate the estate. (Personal Representative is also sometimes referred to as executor or administrator). Most people name their spouse as primary personal representative, with a child, relative, friend, etc. as an alternate. Name Address Personal Representative Alternate Second Alternate Trustee If you choose to avoid probate of your estate by executing a living trust during your lifetime or if a credit shelter trust is established through your will, a successor trustee should be named. The successor trustee would be responsible for managing assets if you, or in the case of a joint trust, neither you nor your spouse, could not manage assets due to incompetency. The successor trustee would distribute assets to beneficiaries after death, as directed by the trust language. Name Address Successor Trustee Alternate Healthcare Agent Who should be named to make medical decisions on your behalf including decisions regarding medical consents, life support issues and nursing home admission if you were unable to make these decisions yourself? (Typically, the primary agent is your spouse). It is not necessary to appoint the same person who is your successor trustee or personal representative as your healthcare agent(s). Name & Date of Birth Address Healthcare Agent Alternate Second Alternate Durable Power of Attorney Who should be named to make financial decisions on your behalf, including bank accounts, investments, real estate transfers, etc.? (Typically, the primary agent is your spouse). I do not advise that you appoint a second alternate agent for this position because it then gives too many people too many rights to your financial accounts. Name Address Primary Agent

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PLEASE COMPLETE THIS SECTION ONLY IF YOU HAVE MINOR BENEFICIARIES OR BENEFICIARIES WITH DISABLITIES Guardian If you have minor children or an emancipated child, you will need to appoint a guardian. The guardian is responsible for the day-to-day care of the child. It is a good idea to name an alternate guardian in the event your first choice cannot serve. Name Address Primary Guardian Alternate Testamentary Trustee You may need a trustee to manage assets for children until they reach an age when you believe they should be capable of managing property on their own. A trustee can keep the childrens money invested wisely and use it for their education, support, etc., until they reach the age specified for outright distribution of assets to them. The trustee can be a relative, friend, trust company or other person you trust to manage and distribute assets according to your wishes. The testamentary trustee can be the same person named as the guardian, or could be a different person. Name Address Testamentary Trustee Alternate Age of Distribution. If you do establish a trust to allow a third party to manage assets for beneficiaries, then it is necessary to decide when the beneficiaries are able to manage the assets on their own. You may consider giving each beneficiary his/her share at the time the beneficiary reaches a particular age. You can also split the distribution, such as at age 25 and the balance at age 30, or 1/3 at 21, 1/3 at 25, and 1/3 at 35. You may use any age or combination of ages.

_______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________

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