Estate Planning

Steven Cruz, CCEPCertified Estate PlannerLife and Estate Planning

Serving the High Desert and San Bernardino County Areas

(818) 939-1656

www.yourlifeandestateplanning.com

What does your estate consist of?

Money

Real Property

Personal Property

Estate

Who benefits from estate planning?

• Just the rich?• No… Estate planning is not just for the Rich.

The Rich benefit from advanced estate planning, but simple estate planning can benefit everyone, no matter their income level.

What benefit come with an estate plan?

• Maintain control of Property: You can preserve assets to care for yourself or loved ones, if you become incapacitated or die.

• Minimizes Disputes: Estates set out your wishes, which are accomplished when you die or when you say, thus avoids probate and court, which avoid family disputes.

What happens if you become incapacitated?

• Incapacity can happen at anytime, if you do not have an estate plan, then the court will take over your assets and a court appointed guardian will have full control and will make decision about your assets that might not be what you want.

Ways to plan for incapacitation

Living Trust Places your wishes and instructions in writing. Allows trustee or successor trustee to manage assets.

Healthcare Directive

Designates an agent to act on your behalf, regarding any medical or health situations.

Power of Attorney

Designates an agent to act on your behalf, regarding any financial situations.

Real Property Management

• There are three ways to have property transferred over without any court interference.

• 1) Joint tenancy with the right of survivorship.• 2) Community property with the right of

survivorship.• 3) Place property in a trust and the successor

trustee or trustees gain the property or can give the property.

What happens if you pass away without an estate plan?

• Your assets will be frozen and placed in probate court, whether married or not.

• Your property will be distributed by the Court law, which may not be your wishes.

• Retirement Plans (401(k), IRA’s, Pensions, Annuities) and Life insurance will be distributed to your allocated beneficiaries.

Basic estate plan

• Last Will & Testament: • Allows you to direct how your assets are to be

distributed.• Must be signed and witnessed by two non-

interested parties. Names an executor of your will.

• Not flexible• Subject to probate

Probate with a Will• Executor is personally responsible for the debts

and distribution of property.• Bank accounts/Real property are frozen until

probate is complete. Families can get an allowance from the court in some cases.

• Requires accounting to the court (CPA Fees).• Probate can take up to two (2) years to

complete.• Probate can charge 8-10% of the assets and will

take their share before distributed.• Attorney fees can add up.• Executor can charge a fee.• Death taxes

How to avoid probate?

• Make lifetime gifts to loved ones.• Make sure all your Beneficiaries are

designated and updated (401(k), IRA’s, Pensions, Stocks, Life insurance).

• Hold all real property with joint tenancy with right of survivorship.

• Create and implement a revocable trust.

What is a Revocable trust?

• It is an agreement that determines how a person’s assets are to be managed and distributed during their lifetime and also upon death.

• A revocable trust involves three parties:– The Grantor: Creator– The Trustee: Manager of the trust– The Beneficiaries: Persons that receive property or

income from the trust.

Revocable Trust• Flexible: Can be changed and amended.• Controls property and assets.• Protects against court interference when you become

incapacitated. Also, avoids probate, and minimizes taxes and expenses of death (Probate court cost, attorney fees, CPA fees etc…).

• Provides safeguards for yourself, your spouse, your children, your parents and any other loved one which you applied as a beneficiaries.

Lifetime Gifting

• Allows an individual to gift up to $14,000 in cash or assets each year to each of as many individuals as they want tax-free.

• Each individual has a maximum lifetime gift exclusion of $5.34 million as of 2014, but will adjust each year to inflation.

• For married couples the exclusion is $10.68 million.• If one spouse dies, then the other spouse can use any

remaining gift tax exclusion that is left over from the deceased spouse.

• Removes future appreciation of property from your taxable estate.

Tax consideration

• $100,000 (Original Basis)

• $250,000 (Current Value)• $150,000 (Appreciation)

• Gifting property during your lifetime, the beneficiary is obligated to pay capital gains taxes on the full appreciated value. In this example that would be $150,000.

Estate tax consideration

• $100,000 (Original Basis)

• $250,000 (Current Value)• $150,000 (Appreciation)

• Gifting property through a trust, the beneficiary is obligated to pay capital gains taxes on the appreciated value that occurs after death. In this example that would be $0.

Many different types of strategies to prepare for the future

• Estate planning has very easy simple strategies and some very advanced strategies, most people just need a simple one. Your needs should to be assessed and evaluated by a professional.

• Do not fail to plan, because when you fail to plan, you plan to fail.

Ask yourself these questions

• Have I created a plan for my future?• Have I created a plan for disability?• Have I created a plan for incapacity?• Have I created a proper plan to control my

assets after I pass?• Does my current plan address all these

questions and how accurately do they reflect my wishes?

We are profession and confidential

• Life & Estate Planning is a firm, that is focused on educating individuals to the needs and risk of life and the future.

• We offer free evaluations and options for all your Life & Estate needs.

• We are a small firm and we focus on personability & relationships.

• We wont just help you for a day, we will be here for you for years and years.