Presentation Transcript

1. Estate Planningin 2011 by Edward P. Ludovici, Esq. 17415 South Dixie Highway Palmetto Bay, FL 33157-5491 305-235-2161
2. What is Estate Planning? Estate planning is the legal mechanism to manage your property if you become incapacitated and to distribute your property after your death.
3. Who needs Estate Planning? Anyone who owns anything. Estate planning lets you decide who will receive your property. It also lets you choose your Personal Representative. Anyone who has children. Estate planning allows you to decide who will be the Guardian of your minor children if you die. Anyone who wants to provide for someone else. Estate planning can protect your loved ones from expenses and delays.
4. Simple Will A legal document in which you choose how to distribute your possessions and make arrangements for the care of your minor children. You appoint the Personal Representative (Executor) of your choice to handle these matters after you die.
5. Will with a Testamentary Trust A will that creates a trust at your death. Ownership of your property is transferred after your death to the Trustee you choose. The Trustee manages your assets according to the instructions you provide in your will. A will with a testamentary trust can be used for the support of a spouse and/or children. If structured correctly, it can reduce inheritance taxes.
6. Codicil to Will A legal document used to make a minor change to an existing will. It is most useful for changing the Personal Representative or a Guardian for your minor children. It is not recommended for changing the bequest clause of a will.
7. Durable Power of Attorney A legal document which allows you to name a person or persons to handle your personal financial affairs in the event you become incapacitated. This instrument is not valid after your death.
8. Designation of a Health Care Surrogate A legal document which enables you to designate a person or persons to make health care decisions on your behalf in the event you become incapacitated.
9. Living Will A legal document in which you instruct your family and physicians that you do not wish for them to take extraordinary measures to prolong your life when death is imminent.
10. Declaration of a Pre-Need Guardian A legal document allowing you to name your own Guardian, instead of one appointed by the Probate Court, before you become incapacitated.
11. Living Trust Revocable or Irrevocable A trust created during your life to manage and distribute your assets. You must also create a simple will known as a pour over will to take care of any non-trust assets that you may own at the time of your death. An irrevocable trust may be used to minimize the impact of inheritance taxes, but involves surrender of control of trust assets while you are alive. A trust will avoid probate as to assets placed in the trust before your death.
12. Federal Estate Taxes Each U.S. citizen is given an annual gift tax exclusion of $13,000 per donee in 2011. A gift to a spouse who is not a U.S. citizen is limited to $136,000 in 2011. The maximum Estate Tax rate is 35% for 2011. The estate tax exclusion for a U.S citizen is $5 Million.
13. Federal Estate Tax Overview The Tax Relief, Unemployment Insurance Authorization and Job Creation Act of 2010, signed into law on December 17, 2010, provides major changes to the federal estate tax rules & rates. For 2011 and 2012, each person can leave $5,000,000 estate tax free with amounts over $5,000,000 taxed at a federal rate of 35%. A couple could leave up to $10,000,000 estate tax free under this new law.  
14. Reunification A great benefit under the new tax law is that a person can give up to $5,000,000 without a gift tax away during their lifetime. Previously, a person could only give away $1,000,000 during their lifetime without gift taxes. The Estate and Gift Tax rules have been “reunified” meaning the rates for gift taxes and estate taxes are the same. A person can also choose to include a generation skip of up to $5,000,000 without incurring any generation skipping tax.
15. Portability Another benefit of the new tax law is that a couple does not automatically “waste” the $5,000,000 estate tax free amount if one spouse does not have $5,000,000 of assets titled in their name at the time of their death.
16. Calculating Estate Taxes Federal estate taxes are paid on assets that donot go to a surviving spouse or a trust for a spouse’s benefit. All assets over $5 Million will be taxed at 35%.
17. WARNING If you own a 401(K), IRA, Life Insurance Policy and/or Annuities, you may need some additional advice on how to title these documents, so that the beneficiaries are who you wish them to be. Please be sure and advise us if this is the situation.
18. Thoughts on IRAsNot exactly Estate Planning, but important nonetheless.Needed for retirement – Social Security income may be limited. In 2011, you can make up to a $5,000 contribution to an IRA, if you are under age 50 before year’s end. If age 50 or over by year’s end, then the limit is $6,000. Consider converting your Traditional IRA to a Roth IRA. As of 2008, retirement plans of decedents can now be rolled over by non spouses.
19. Thank You For a personal consultation to review your estate planning requirements, please call: 305-235-2161 for an appointment Edward P. Ludovici, Esq. Ludovici & Ludovici, P.A. 17415 South Dixie Highway Palmetto Bay, FL 33157-5491 eludovici@ludovici-law.com