managing for today and tomorrow
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Managing for Today and Tomorrow. Estate Planning Part One Estate Planning Concepts and Tools. What is Estate Planning?. The overall process of making decisions as to how property is to pass to others, during one’s lifetime, at death or after death. Who Should Do Estate Planning?. - PowerPoint PPT PresentationTRANSCRIPT
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Managing for Today and Tomorrow
Estate Planning Part One
Estate Planning Concepts and Tools
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
What is Estate Planning? The overall process of making
decisions as to how property is to pass to others, during one’s
lifetime, at death or after death.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
• Everyone… It is not just about money.• Unless you are happy with the plan
your state has provided.
Who Should Do Estate Planning?
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
• Just providing nonbiased educational information.
• Seek out your own legal council.
We Are Not Giving Legal Advice
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Who is the Estate Plan for?
• Is it to pass a business to the next generation?
• Is it to plan for retirement?
• Is it to jump start the kids’ ambitions?
• Is it to avoid taxes?
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
What are your most important goals?
• Individual
• Family
• Retirement
• Business
• Spiritual
• Other
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Key is to Articulate Goals
• The parents together
• The parents individually
• The on-farm heirs
• The off-farm heirs
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
• What to do if spouse dies - Receive income? Sell interest? Participate in management?
• What to do if both die?• What to do if entire family dies?
Develop Goals under Various Circumstances
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Common Estate Planning Goals• Minimize taxes at death.
• Minimize probate costs and delays.
• Conserve property during life and after death in accordance with goals.
• Provide financial security: Parents in retirement. Family member with a disability.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Key Areas of Concern• Guardian for minor children or adult children with
special needs.• Providing income for a surviving spouse or children.• Management of estate property, assets, investments.• Minimization of probate and settlement expenses.• Minimization of estate and inheritance taxes.• Flexibility.• Liquidity for necessary and unavoidable expenses.• Gift planning.• Continuation and/or transfer of the business.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Put Together a Team of Advisors
• Start with referrals and interview potential advisors Accountant Banker Insurance agent Investment advisor Lawyer Financial Planner
http://www.extension.iastate.edu/agdm/wholefarm/pdf/c4-61.pdf
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
• Determine what you own and how much it is worth.• Who do you want to receive your bounty?• When do you want them to get it?
• Review any past estate planning. • Review of family insurance program.• Advisability of lifetime gifting.
Getting Started
http://www.extension.iastate.edu/agdm/info/eyep/c4-57.pdf
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Important Considerations• Type of Assets
Inventory Depreciable
oMachinery & EquipmentoPermanent Improvements
Real EstateoLandoPersonal Residence
• Tax Basis• Alternative forms for disposing of property
during life
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Fair Market Value of Real Estate
• You may be pleased!
• May be one of your greatest stores of wealth.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Ownership / Control• Fee simple
• Life estate or life tenants
• Remainder interest.
• Leaseholds
• Tenants in common.
• Joint tenants with right of survivorship.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownershipTenancy in common:
• Each tenant holds an undivided interest in the property.
• Upon a tenant’s death, the interest passes in accordance with the tenant’s will (or state law if no will.)
• The decedent’s estate includes only the decedent’s interest.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownershipJoint tenancy:
• Passes by survivorship designation.• Precludes use of life estate/remainder
arrangement as to non-marital portion of the estate.
• Magic words of conveyance.• Takes precedence over the will.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownership
Tenancy by the entirety (not allowed in all states):
• Husband and wife can together convey a fee simple but neither can unilaterally sever the tenancy.
States may have other forms of ownership as well.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Estate Planning Implications of Property Ownership Forms
• Spousal joint tenancies: The property is treated at the first death
as belonging 50% to each spouse for federal estate tax purposes.
“Fractional share” rule.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Estate Planning Implications of Property Ownership Forms
• Non-spousal joint tenancies: Property is taxed in the estate of the first to
die except to the extent the surviving owner proves contribution for its acquisition.
“Consideration furnished” rule. Property included in decedent’s estate
receives a new basis at death.
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Class Activity
Find the Legal Terminology Vocabulary Matching Exercise
and complete
Managing for Today and TomorrowSuccession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Homework Assignment
• Find “Last Will and Testament”.
• Find ten of terms listed in the Activity Worksheet in your will.
• Check the titles on all real estate to see how it is owned.
• Review the Estate Planning Questionnaire found in the book.