J.K. Lasser Pro Estate and Business Succession Planning: A Legal Guide to Wealth Transfer

by Fishkind, Russell J.; Kautz, Robert C.

• ISBN13: 9780471396802
• ISBN10: 047139680X
• Edition: 1st
• Format: Hardcover
• Copyright: 2001-01-01
• Publisher: John Wiley & Sons Inc

Summary

Written by two attorneys who specialize in estate planning, this book clarifies all the issues involved in planning an estate and transferring wealth. It offers comprehensive estate planning guidelines, including creating a will, designating power of attorney, trusts, and life insurance, and includes up-to-date estate and inheritance tax information.

Table of Contents

Acknowledgments	xiii
Introduction	xv
The Heart of the Estate Plan	1	(6)
Redefining Priorities	1	(2)
What Is Estate Planning?	3	(1)
What Is Business Succession Planning?	3	(1)
Fact Gathering	3	(1)
Designing and Implementing the Plan	4	(1)
The Team of Advisers	5	(1)
Capturing the Heart of the Plan	6	(1)
Your Last Will and Testament	7	(32)
Twenty Factors to Consider in Preparing a Last Will and Testament	8	(9)
Assembling the Team	17	(1)
Change of Life Circumstances	18	(1)
Creating the Structure of Your Last Will and Testament	19	(4)
Executing the Will	23	(1)
Choosing Fiduciaries	24	(5)
Testamentary Age-Terminating Trusts for Minor Children	29	(1)
Bequests to Friends and Grandchildren	30	(1)
Passing of Real Estate	31	(1)
Personal Property Memorandum	32	(3)
Disinheriting a Spouse and/or Family Members	35	(1)
Children from Prior Marriages	36	(2)
Who Will Take Care of Your Pets?	38	(1)
Funeral and Burial Arrangements	38	(1)
Letter to One's Executor	38	(1)
Power of Attorney	39	(8)
Durable Power of Attorney	43	(1)
Springing Durable Power of Attorney	43	(1)
Limited Power of Attorney	44	(1)
Power of Attorney and Gifting	44	(1)
Selecting an Attorney-in-Fact	45	(1)
Possible Abuses	45	(2)
Advance Directive for Health Care--Your Living Will	47	(6)
Ignoring Right-to-Die Orders	47	(2)
Instruction Directives or Living Wills	49	(1)
Proxy Directives	50	(1)
Appointing a Health-Care Agent	50	(1)
Formalities	51	(1)
Conclusion	51	(2)
Utilization of the Exemption Equivalent and Annual Exclusion	53	(12)
Exemption Equivalent Defined	53	(1)
Applicable Credit and Exemption Equivalent During One's Lifetime (Inter Vivos)	54	(1)
Applicable Credit and Exemption Equivalent upon Death	55	(1)
Estate Equalization	56	(3)
Annual Exclusion	59	(2)
Gifting for Education and Health Care	61	(1)
Choosing the Appropriate Assets to Gift	61	(1)
Conclusion	62	(3)
Spousal Planning	65	(8)
Outright Transfer	66	(1)
Qualified Terminable Interest Property (QTIP) Trust	66	(2)
Estate Trust	68	(1)
Qualified Domestic Trust (QDOT)	68	(3)
Power of Appointment Trust	71	(1)
Conclusion	72	(1)
Irrevocable Life Insurance Trusts	73	(14)
Factors to Consider Before Creating an Irrevocable Life Insurance Trust	74	(1)
The Three-Year Look-Back	75	(1)
Incidents of Ownership	75	(1)
Crummey Notices	76	(1)
Hanging Powers	77	(1)
Administration of the Life Insurance Trust	78	(5)
Second-to-Die (Survivorship) Life Insurance Trust	83	(1)
Provisions to Include in the Life Insurance Trust	84	(1)
Irrevocable Trust versus Beneficiaries Owning the Life Insurance Policy	85	(1)
Conclusion	86	(1)
Generation-Skipping Transfer Tax	87	(10)
Direct Skips	89	(1)
Taxable Terminations	90	(1)
Taxable Distributions	90	(1)
Predeceased Ancestor Exception	91	(1)
Annual and Lifetime Exclusions from GST Tax	91	(2)
Computation of GST Tax Liability	93	(1)
Effective Use of the Lifetime Generation-Skipping Transfer Tax Exemption	94	(1)
Practical Considerations	95	(2)
Transferring Wealth to Minors	97	(8)
Introduction	97	(1)
Uniform Gifts to Minors Act Account	97	(1)
Trust Created Under Code Section 2503(c)	98	(1)
Trust Created Under Code Section 2503(b) (Mandatory Income Trust)	99	(1)
Crummey Trust	100	(3)
Conclusion	103	(2)
Integrating Retirement Planning with Estate Planning	105	(8)
Introduction	105	(2)
Minimum Distribution Rules	107	(1)
Death of the Plan Owner Prior to Required Beginning Date	108	(1)
Estate Planning with Retirement Plan Assets	108	(2)
Funding a QTIP Trust with Plan Assets	110	(1)
Charitable Remainder Trust	110	(1)
Conclusion	111	(2)
Charitable Planning	113	(10)
Introduction	113	(1)
Common Forms of Charitable Planning	114	(4)
Qualifying Charities	118	(2)
How Do You Determine the Amount of the Charitable Deduction?	120	(1)
Conclusion	121	(2)
Supplemental Needs Trusts	123	(8)
Safeguarding the Trust	124	(1)
Medicaid	125	(1)
Sources of Funding	125	(2)
Choosing a Testamentary Trust	127	(1)
Trustees	128	(3)
Qualified Personal Residence Trust	131	(10)
The Savings You Can Expect	132	(1)
The Drawbacks	133	(2)
Personal Residences	135	(1)
Death of the Grantor Prior to the End of the QPRT Term	136	(1)
During the QPRT Term	136	(1)
The Expense Factor	137	(1)
Sale, Destruction, or Damage of the Residence	138	(1)
Post Survival of the QPRT Term	138	(3)
Integrating the Titling of Assets with the Intent of the Estate Plan	141	(10)
Introduction	141	(1)
Titling Faux Pas	142	(1)
Jointly Held Property	143	(2)
Tenants in Common	145	(1)
Pay-on-Death Accounts	145	(1)
Life Insurance	146	(1)
Revocable Inter Vivos Trusts	146	(1)
UGMA Accounts	147	(1)
Life Insurance in Matrimonial Actions	147	(1)
IRAs and Qualified Plans	148	(1)
Conclusion	149	(2)
Business Succession Planning	151	(6)
Introduction	151	(1)
What Is Business Succession Planning?	152	(1)
Who Is Responsible for Planning?	153	(1)
Commitment and Execution Are Pivotal	153	(1)
Seeking Professional Counsel	154	(3)
Start with a Business Valuation	157	(14)
General Valuation Comments and Observations	157	(1)
Estate and Gift Tax Implications	157	(1)
Fundamental Factors of the Business Valuation	158	(5)
Valuation Discounts	163	(6)
Conclusion	169	(2)
Buy-Sell Agreements	171	(12)
Introduction	171	(1)
Use of a Buy-Sell Agreement upon the Death of a Shareholder	172	(1)
Use of a Buy-Sell Agreement in Determining Price for the Stock of a Deceased Shareholder	173	(2)
Acceptance of Price Determination Methods by the IRS	175	(1)
Cross-Purchase versus Redemption Agreements	176	(4)
Conclusion	180	(3)
Funding Buy-Sell Agreements	183	(6)
Introduction	183	(1)
Can Life Insurance Help?	184	(1)
Disability Buyout Insurance	185	(1)
Retirement	186	(1)
Valuation Updates	187	(2)
Transference of Business Interests	189	(10)
Factors to Be Considered Before Gifting Company Stock	190	(4)
Enhanced Estate Liquidity	194	(1)
Planning for Control of Family Business	194	(1)
Loss of Step-Up in Basis	195	(1)
Loss of Control over Property	195	(1)
Methods of Transfer	196	(1)
Conclusion	197	(2)
Family-Owned Business Exclusion	199	(6)
Introduction	199	(1)
Deduction Amount	200	(1)
Initial Qualifying Rules	200	(1)
The 50% Test	200	(1)
Existence of Trade or Business	201	(1)
Ownership Test	201	(1)
Qualified Heir Test	201	(1)
Material Participation	202	(1)
Recapture Rules	202	(1)
Conclusion	203	(2)
Family Limited Partnerships	205	(8)
Introduction	205	(1)
Who Controls the Partnership?	206	(1)
Discounting the Value of the Limited Partnership Interest	207	(2)
Should You Form an Entity to Serve as the General Partner?	209	(1)
Asset Protection	210	(1)
Conclusion	211	(2)
Grantor Retained Annuity Trusts and Grantor Retained Unitrusts	213	(10)
Introduction	213	(1)
What Is a GRAT?	214	(1)
What Is a GRUT?	215	(1)
GRAT OR GRUT--Which One Should You Choose?	215	(1)
Assets to Be Placed in the GRAT or GRUT	215	(2)
Qualified Annuity Interests/Fixed Term	217	(1)
Minimizing the Mortality Risk of a GRAT/GRUT	218	(2)
Sale of the GRAT Remainder Interest to a Dynasty Trust	220	(1)
Conclusion	221	(2)
Intentionally Defective Grantor Trusts	223	(6)
Introduction	223	(1)
The Major Benefit of an IDGT	224	(1)
Implementation of an IDGT	225	(1)
Drafting the IDGT Trust Agreement	226	(1)
IDGT versus GRAT	227	(1)
Conclusion	228	(1)
Split Dollar Life Insurance	229	(10)
Introduction	229	(1)
The Split Dollar Financing Arrangement	230	(1)
Benefits of a Split Dollar Arrangement	231	(1)
Tax Consequences	232	(1)
Ownership of the Life Insurance Through an Irrevocable Life Insurance Trust	233	(1)
Different Types of Split Dollar Arrangements	233	(1)
Loans from the Cash Value in the Life Insurance Policy	234	(1)
Private Split Dollar	234	(2)
Conclusion	236	(3)
Self-Canceling Installment Notes and Private Annuities	239	(8)
Introduction	239	(1)
Selling Assets as an Estate Planning Tool	239	(1)
Self-Canceling Installment Note	240	(2)
Private Annuities	242	(3)
Conclusion	245	(2)
Conclusion	247	(18)
Introduction	247	(1)
Fact Pattern #1	248	(2)
Fact Pattern #2	250	(3)
Fact Pattern #3	253	(3)
Fact Pattern #4	256	(3)
Fact Pattern #5	259	(3)
Conclusion	262	(3)
Appendix A	265	(86)
Appendix B	351	(4)
Index	355