Estate Planning

Annie’s ProjectFebruary 6, 2007Coweta Oklahoma

Estate Planning - Introduction

A single correct answer does not exist.No perfect solution exists

Laws change Family situations change

Must evaluate the good points and bad points of each estate planning tool.

The ultimate decision of what to do is yours.

Estate Planning -- ObjectivesProvide sufficient income to live comfortably

and take care of emergencies.

Make sure assets go to those you want to receive them.

Minimize estate settlement costs.

Estate Planning - Things to Keep in Mind

Keep it simpleMaintain flexibility to change your plansBe sure to take care of yourself firstYou worked hard to accumulate your

estate, so enjoy it.

Your Estate

Everything you own at the time of your death.

Real Estate Personal Property

Investments Business Interests

Savings Accounts Survivor Pension Benefits

Life Insurance Proceeds

Gross Estate Appraised at Market Price

Total real and personal propertyFull value of property owned in joint tenancy

except that owned with spouse One-half value joint tenancy with spouse Insurance owned or controlled by decedentTaxable portion of gifts included in tax base

Taxable Estate

Gross Estate = Value of All Property OwnedLess Allowable Deductions

Federal Allowable Deductions

Unified tax creditMarital deduction - unlimitedTransfers to exempt charitable,

religious, and similar institutionsClaims against estate,

administration costs, funeral expenses, etc.

Determining Basis of Property

Purchased Property - purchase price, plus capital improvements, less depreciation.

Gifts - Same as DONOR’S basis PLUS portion of any GIFT TAX paid.

Inherited Property - DECEDENT’S BASIS Usually appraised Value for Estate Tax Purposes

Estate and Gift Tax RulesFederal

Unified Credit 2007 & 2008 - Can Transfer $2,000,000 2009 - $3,500,000 2010 - Estate Tax Repealed 2011 & beyond - $1,000,000 (revert back to 2002

rules) 100% Marital DeductionAnnual Gift Tax Exclusion

$12,000 ($24,000 for Couple using gift splitting)

Estate and Gift Tax Rules

OklahomaUnified Credit

2007 - Can Transfer $1,000,000 2008 - $2,000,000 2009 - $3,000,000 2010 & beyond – Estate Tax Repealed

No Gift Tax (3 year contemplation of death rule still applies)

Oklahoma Allowable Deduction

$1,000,000 to lineal and collateral heirs as of 1/1/07

$1,000 burial lot or crypt

$500 monument

Debts of the estate, attorneys fees and others

Property Transfer

Oklahoma law of descent Will Revocable living trust Irrevocable living trust

Wills -- AdvantagesLeaves control with owner until death.Can be changed easily.May select executor.May have executor serve without bond.May name guardian (recommendation).Covers all property not held in joint tenancy

except insurance.

A Living Trust Is...

The convenient way to pass your estate to your heirs eliminating the stress and financial burden of lawyers, courts, or the probate system.

Purpose

Avoid probateAvoid guardianshipHelp to reduce estate taxesReduce the emotional burden on

loved ones by reducing estate settlement time and expenses

Other Important Estate Planning Documents

Durable financial power of attorney

Durable health care power of attorney

Living will

General Principles and Conclusions

All parents should retain enough assets to live comfortably and take care of any emergencies.

Not only is the best estate plan different for each family, but the best plan may change with changes in the estate or family.

Consult with a qualified estate planner.

ConclusionNot one correct answer

Things change:Be aware of Oklahoma & Federal Estate

TaxesWe don’t want to subject Estate to taxes more

than onceIf we have done a good job of Estate Planning,

we will minimize estate settlement costs.

Conclusion

Estate Taxes and ProbateBe sure to take care of yourself first.Don’t run out of money or property.Make sure you make up your own mind and

you feel comfortable with your decision.Realize you will want to change your mind at

some point in the future, so keep things flexible.

References

F-771 Trusts: Uses and ConsiderationsF-773 ProbateF-782 Wills: Uses and Considerations

Homework Assignment

Determine if you have an Estate Plan and review the document(s).