Sun City West, AZ

Estate Planning 101

Law Office of Dennis Caufield, LLC

Insurance

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“What is an “Estate?”

CashStocks

JewelryIRA’s

Investments

Your Home

Income Properties

Automobiles Antiques

Bonds&

3 Basic Keys to Estate Planning

Maintaining control during incapacity

Quick & cost effective wealth transfer at death

Protecting beneficiaries from themselves & others

When Should You Plan Your Estate?

TodayMental

IncapacityCatastrophic

Illness Death

Your Planning Opportunity

Living Trust

WillLiving Will

Powers of Attorney

2 Platforms for Planning

Will based plan

Trust based plan

Beneficiary(ies)

Will Based Plan

Properly titled assets

What is a Trust?

“a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it.”

Restatement Second of Trust §2

What is a Trust?Grantor

Trustee(s)

Beneficiary(ies)

#1 Mistake

Failing to Address Health Care Decisions

Online Storage of Healthcare Documents

Free Service Offered by the Arizona

Secretary of State

Visit www.azsos.gov/adv_dir

#2 Mistake

Failing to Plan for HIPAA

(Access to Medical Records)

#3 Mistake

No plan to control financial & property matters during incapacity

No Wealth Transfer Strategy

#4 Mistake

Intestacy

James Dean:– Died at age 24 without a will– Entire estate, including licensing fees, passed

to his father, who had abandoned him as a child.

– Licensing fees generate $1 - $3M annually.

#5 Mistake

Failure to Understand & Plan

For Death Taxes

Federal Estate Federal Estate Tax Tax

YEAR EXCL. AMT. TOP TAX RATE

2001 $675,000 55%

2002-2003 $1,000,000 49-50%

2004-2005 $1,500,000 47-48%

2006-2008 $2,000,000 45-46%

2009 $3,500,000 45%

2010 Full Repeal N/A

2011-2012 $5,000,000 35%

2013- $5,250,000 40%

#6 Mistake

Thinking Children – Minor And Adult – Don’t Need Inheritance Protection

What if your child …What if your child …

Suffers a divorceSuffers a divorceExperiences Experiences

creditor problemscreditor problemsGets suedGets sued

Inheritance Protection TrustInheritance Protection Trust

Adult child is trustee of Adult child is trustee of his trusthis trust

Has significant access Has significant access to income and principalto income and principal

Can ultimately Can ultimately consume it all -- no consume it all -- no strings attachedstrings attached

Predators, Spend-thrifts

The Woolworth Misfortune– Granddaughter of Woolworth founder, Barbara Hutton– At age 10, she inherited $25 Million in trust.– Under the terms of the Trust, Barbara received the

entire Trust ($50 million) outright with no strings attached at the age of 21.

– 46 Years and 7 husbands later, she died at age 66 with a mere $3,000.

– Years of relentless exploitation, spousal abuse, drug addiction and outrageous, uncontrolled spending.

#7 Mistake

Failing to Transfer “Values”

#8 Mistake

Not Preserving Tax Deferral Benefits of

Retirement Plans

HUGE LOSS When Your IRA is Cashed-out Early and Spent!

Assumes $100,000 at age 40 earning 6% andChild fully withdraws and must pay the tax due

A difference of over $ 400,000 on a $100,000 IRA!

Child’s Cum. Withdrawals+Balance

Age Remains Invested

Cash Out

50 $ 170,352 $ 65,000

60 $ 264,583 $ 65,000

84 $ 474,953 $ 65,000

Child’s Cum. Withdrawals+Balance

Age Remains Investestedt

Cash Out

50 $ 170,352 $ 98,361

60 $ 264,583 $ 137,062

84 $ 474,953 $ 158,983

Still a BIG LOSS When Your IRA is Cashed-out Early and Invested!

Assumes $100,000 at age 40 earning 6% andChild fully withdraws and must pay the tax due

A difference of over $ 300,000 on a $100,000 IRA!

#9 Mistake

Failing to Organize and Consolidate

#10 Mistake

In 2nd marriages, failing to protect your spouse, and your kids

#11 Mistake

Failing to Plan for Tangible Personal

Property

#12 Mistake

Failing to Name a Guardian for Minor or Incapacitated Children

#13 Mistake

Believing Estate Planning is a “One-Time

Event”

Where Do You Go From Here?Where Do You Go From Here?

“Without counsel plans go wrong, but with many advisers they succeed."    Proverbs 15:22

Free Initial Consultation

Law Office of Dennis Caufield, LLCPlan Today for a Secure Tomorrow