While estate planning for your small business may seem daunting, it can be easily understood when explained in basic English. That’s exactly what our Florida estate planning attorneys will try to achieve in this blog!

The Steps to Protecting Your Small Business With Estate Planning

• Create a will and estate plan
• Contact an estate planning attorney
• Consider tax planning
• Resolve family-owned business issues
• Buy life insurance and disability insurance
• Create succession plan
• Speak to the affected people
• Keep your small business estate plan updated

Estate planning for a small business requires detailed thinking and various hypotheticals. You should not attempt to put an estate plan together alone. In the world of business, one mistake can leave the door open for liability. That’s the last thing your surviving family needs when you pass away. Instead, you should consult an estate planning attorney who has significant experience.

1. Create a Will and Estate Plan

The first critical step you should take is to create a basic estate plan and, most importantly, a will.

• Create a will that records your wishes for how your small business and assets should be distributed after your death.
• Appoint a ‘power of attorney’, who will manage your finances and business decisions if you’re incapacitated.
• Appoint a ‘healthcare directive’, who will make medical decisions if you no longer can alone (such as treatment and life support).

If you don’t have a will, your business will be distributed according to Florida’s intestate laws. But by having a will, you can control how the business is divided up and dealt with after your death or incapacitation.

In the will, you should also appoint a ‘power of attorney’. This individual gains authorization to make financial and business decisions on your behalf.

Doing these steps will ensure you have a basic estate plan. After this, you should consult your estate planning lawyer to cover deeper issues.

For example, it may suit your circumstances to place your assets into a trust and title business assets in the trust’s name. Doing so may make for a smooth transition for your surviving spouse. These types of decisions will vary with each small business owner.

2. Consider Tax Planning

Tax planning is an often overlooked part of small business estate planning.

There may be legal ways you can restructure your business to minimize the taxes your surviving loved ones will face. Tax laws are constantly changing, however, and naturally, legally sensitive. You should always speak to an estate planning attorney specializing in tax planning – both for your safety and your financial benefit.

The U.S. government currently imposes an estate tax, which must come from your estate before your beneficiaries receive their share.

However, the current 40% federal estate tax only applies to estates worth over $11.18 million. Which tends to mean a small business is unaffected. Florida currently has no state inheritance tax.

Other tax considerations may be required. For example, many of your assets may be in a retirement account. These will pass to your beneficiaries but later be taxed on withdrawal.

An estate planning attorney may be able to prevent this scenario from arising.

3. Resolve Family Owned Business Issues

Estate planning for small businesses that are family-owned comes with a range of unique issues. For example, there may be tension and fights over who will become the owner once you retire or pass away.

There are plenty of solutions. For example, you can plan for all the assets to pass to your future owner of choice. This can prevent any in-family fights that could put the family and business at risk.

You should also use estate planning to ensure the assets remain in the family, if you wish. When there are other external business partners, there is a risk that this doesn’t happen.

This is an often overlooked estate planning step, but one that you should not neglect. As always, consult an estate planning attorney before making any decisions legally binding.

4. Buy Life Insurance and Disability Insurance

Every small business owner should have life insurance or disability insurance. It’s critical as it will ensure your family has a source of income if you pass away or become disabled.

There are two common types of policies you can buy:

• Personal life and disability insurance with your family as the named beneficiary.
• Key Person Life and disability insurance with the business as the named beneficiary.

An estate planning attorney can help you determine how much coverage you need to purchase.

5. Create a Succession Plan

A succession plan is often considered succession planning rather than estate planning, but should still be addressed. Your will should state who you want to receive after your death. Most importantly for your small business, you should state who you want to run your business.

This is a critical step because it can ensure the business runs smoothly or is prepared for a sale without any hiccups.

Succession plans contain a multitude of hypothetical and business details and should be assisted by an estate planning attorney.

Note: Keep your succession plan documents consistent with your will – to prevent invalid documents and expensive litigation later.

6. Speak to the Affected People

A key step in any mature and successful small business estate planning is to discuss your plans with the affected people and parties.

These may be tough conversations with uncomfortable truths. But doing so can prevent fights in the future and ultimately prevent pain when someone assumes something that isn’t true.

In many cases, it can be wise to have the entire family sit down with your estate planning lawyer so everyone is on the same page with the same vision.

7. Keep Your Small Business Estate Plans Updated

The number one mistake after small business owners create their estate plan is to forget about it.

You must keep it updated. Any time there are laws changes, family changes, business changes or changes to your vision and wishes – update it!

If you don’t, someone important (such as a grandchild) may miss out on an inheritance, or an ex-spouse may still be listed in the will.

Having an estate planning attorney on your side can ensure you keep up with the transitions in your life and the law.

Contact an Estate Planning Attorney for Small Businesses

The most important and final step is to contact an estate planning attorney. Our Florida estate planning attorneys can help with every step from tax planning and will drafting to litigation or trusts.

We’re just a phone call away,

Free Consultations

Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced estate planning attorneys, they can help you create a will to avoid complications for your family after your death.

Schedule a free consultation today to get started.

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What Are Trusts?

Types of Trusts

Revocable Living Trusts

Testamentary Trust

What Is the Difference Between a Trust and a Will?

Why Set up a Trust? – The Benefits

Remain in Control

Tax Benefits

Avoid Florida Probate Court

Protection

Ongoing Transfers

Trusts Protect Special Needs Individuals or Medicaid Recipients

Key Takeaways – What Are Trusts?

• A trust is a special type of legal document that holds assets for beneficiaries to receive after the trust creator’s death.
• There are the parties involved in trusts: grantors, trustees and beneficiaries.
• Trusts set rules on when and how assets are distributed.
• Trusts ensure your wishes are retained, even after death.
• Trusts can remove the need for probate.

Hire an Estate Planning Attorney for Trusts in St Petersburg, FL

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Benefit 1: Dynasty Trusts Remove Assets from the Transfer Tax System

The primary benefit of a Dynasty Trust is that when you transfer assets to trust during your lifetime, the assets become sheltered from the application of future wealth transfer taxes. There are three types of federal wealth transfer tax: the estate tax, the gift tax, and the generation-skipping transfer tax (or “GST tax” for short).

In 2020, the federal estate and gift exemption is approximately $11.6 million per person. This exemption is unified, meaning that taxable gifts during your lifetime reduce the amount of assets you can pass at death estate tax-free. Taxable gifts mean the value of any uncompensated transfers you make in a given calendar year that exceed the gift tax annual exclusion amount, which in 2020 is $15,000.00 per recipient. This means that in 2020, you can give up to $15,000.00 to multiple individuals without paying a gift tax. Let’s look at an example:

Example 1: Mark is an unmarried individual residing in Florida with two adult daughters. In 2020, Mark gives each of his daughters checks in the amount of $15,000.00. Because the gifts do not exceed the gift tax annual exclusion amount of $15,000.00 per recipient, Mark does not have to report the transfers to the IRS, and his $11.6 million estate tax exemption remains intact.

Example 2: Same facts as above, except that in 2020, Mark gives his daughters checks in the amount of $20,000.00 each. Because the gifts exceed the gift tax annual exclusion, Mark must report the gifts to the IRS on a federal gift tax return (IRS Form 709), and Mark’s $11.6 million estate tax exemption will be reduced by $10,000.00 (the amount the gifts exceed the gift tax annual exclusion per recipient). Mark will not be required to pay a gift tax unless and until his $11.6 million exemption has been consumed by taxable gifts during his lifetime. In 2020, the estate and gift tax rate is 40 percent.

The imposition of the GST tax is in addition to the estate and gift tax. In 2020, the amount of the GST tax exemption is the same as the estate and gift tax exemption (approximately $11.6 million). The GST tax is triggered by transfers to a “skip person” (typically a grandchild or more remote descendant) that exceed the transferor’s available GST tax exemption. The GST tax rate also is 40 percent. For example:

Example 3: Mark dies in 2020 with an estate valued at $20 million, which exceeds his estate tax exemption of $11.6 million by approximately $8 million. Mark’s revocable trust devises his entire trust estate to separate spendthrift trusts for each of his four grandchildren ($5 million per grandchild). In addition to an estate tax liability of approximately $3,200,000.00, Mark’s grandchildren’s inheritance will be reduced by an additional $3,200,000.00 in GST tax. Thus, in this example, the grandchildren’s trusts will be funded with $13,600,000.00 of the original $20,000,000.00 trust value.

What could Mark have done differently to avoid more than $6 million of estate and GST taxes? Frankly, a lot of things. But for purposes of this article, we will focus on using Dynasty Trusts to reduce wealth transfer tax:

• First, Mark could have established and funded a Dynasty Trust for each of his grandchildren during his lifetime, instead of waiting until his demise when his net worth likely had peaked. Ideally, he would have done this before his net worth had accumulated beyond his available exemptions.
• Second, Mark would have started utilizing his gift tax annual exclusion to fund each of the Dynasty Trusts with at least $15,000.00 of assets per year to reduce the value of his estate in a tax-free manner.
• Third, Mark could have utilized his estate and gift tax exemption to make larger asset transfers to the Dynasty Trusts, thereby removing the value of the assets and any future appreciation from his overall estate, again without paying any wealth transfer tax.
• Lastly, Mark could have included a formula clause in his revocable trust to devise additional assets to the grandchildren’s Dynasty Trusts at death, but only to the extent of his remaining GST tax exemption, with the balance of the assets either passing to Dynasty Trusts for his daughters, or possibly to charity or a private foundation in order to generate an estate tax charitable deduction to offset the estate liability otherwise due to the IRS.

Once the assets are transferred to the Dynasty Trust, they become sheltered from the application of future wealth transfer taxes, meaning the assets will continue to appreciate for many generations to come free of estate and GST taxes. The Trustee of the Dynasty Trust is empowered to use the trust funds to pay for the health care, education, maintenance and support of the beneficiaries. The Trustee also can be authorized to use funds to pay for travel and residential and vacation properties, all for the use, enjoyment and happiness of the beneficiaries.

Benefit 2: Dynasty Trusts Provide Asset Protection for your Beneficiaries

To the extent a beneficiary of the Dynasty Trust would like to purchase a home or a vacation residence, the Trustee can use the trust funds to purchase these assets on behalf of the beneficiary. In other words, the Trustee, not the beneficiary, will own these investments for the use and enjoyment of the beneficiaries. The Dynasty Trust will contain a provision prohibiting the Trustee from distributing assets to or for the benefit of a beneficiary’s creditors. This type of provision is known as a “spendthrift clause.” Because the Trustee – and not the beneficiary – controls the trust investments, and because the Dynasty Trust contains a valid spendthrift clause, a beneficiary’s creditors cannot reach trust assets to satisfy a claim or judgment against the beneficiary.

Even responsible beneficiaries who are financially savvy could be involved in an automobile accident or divorce which otherwise would expose his or her inheritance but for the Dynasty Trust. Additionally, even the best physicians and attorneys are exposed to potential malpractice claims by virtue of their occupations. Therefore, a Dynasty Trust with a valid spendthrift clause is one of the strongest asset protection vehicles available to protect your beneficiaries’ inheritance from potential creditor exposure.

Benefit 3: Dynasty Trusts Are Flexible

Dynasty Trusts can be prepared in a way that allows them to adapt and react to future changes in the law and even the unique personality traits, talents and limitations of beneficiaries who do not exist yet but who will be born in the future. There also are several flexibility features to consider during your lifetime. For example, it is possible to structure the Dynasty Trust as a “grantor trust” for income tax purposes, so that even though you have transferred ownership of the assets for wealth transfer tax purposes, you still are considered the owner of the assets for income tax purposes. Why do this? Because it allows you to pay tax on any income generated by trust assets during your lifetime, thus allowing the assets to appreciate and compound much like a Roth IRA. The Dynasty Trust can be designed to turn off grantor trust status at such point you no longer wish to pay the income tax liability. If grantor trust status is turned off, then the trust becomes responsible for the income tax liability. Although irrevocable trusts can be subject to high income tax rates, this can be minimized by making distributions to trust beneficiaries who may be in much lower income tax brackets.

Grantor trust status also can be useful to maximize how assets are transferred to the Dynasty Trust. For example, instead of only using gifting, you also can “sell” assets to your Dynasty Trust during your lifetime by means of an installment sale. Because the transfer is a sale and not a gift, no gift tax will be due, and your estate tax exemption will not be reduced. Additionally, because you are considered both the owner of the assets being transferred (the seller) and the owner of the Dynasty Trust (the buyer) for income purposes, there is no capital gain due on the sale (essentially you are selling the assets to yourself). The only requirement is that the installment sale must include a minimal interest rate, which is documented by a promissory note between you and the Trustee of the Dynasty Trust. This technique allows you to transfer high-yield assets to the Dynasty Trust during your lifetime, thereby removing future appreciation from your estate, without having to pay wealth transfer tax or otherwise reduce your available exemptions.

Dynasty Trusts can be layered into your existing estate plan quite easily. If your estate includes stock in a family or closely-held business, using Dynasty Trusts, combined with tax-free annual gifting and low interest installment sales, can significantly reduce or even eliminate the wealth transfer tax your beneficiaries otherwise would have to pay upon your demise. The Dynasty Trust will shelter the trust assets from wealth transfer taxes for up to 360 years and provide your beneficiaries with significant asset protection for their lifetimes, thereby preserving your legacy for generations to come.

Choosing whether to have a Will vs. a Trust as the cornerstone of your estate plan, you should consider whether any of the factors noted above apply to you. While it is always appropriate for the estate planning attorney to make a recommendation, even a strong recommendation, one way or the other, the attorney’s main job is to provide you with the information required to make the best decision based on your unique estate planning goals and budget.

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A Trustee is a fiduciary who oversees assets held in trust for the benefit of one or more beneficiaries. A “fiduciary” is a person or organization that acts on behalf of another person to manage assets. Fiduciaries are bound by ethical duties, including the duties of good faith and loyalty. Here are the main qualities to consider in selecting a Trustee:

1.) A Trustee Should Be Organized and Detail-Oriented

Serving as Trustee involves overseeing trust investments, communicating regularly with beneficiaries, providing detailed accountings showing how trust funds have been allocated and spent, filing tax returns, and exercising discretion when a beneficiary requests a distribution that is permissible (but not necessarily mandated by the terms of the trust). Thus it is imperative that the Trustee has impeccable recordkeeping and organizational skills.

2.) A Trustee Should Be Honest and Loyal

A fundamental duty of the Trustee is that he or she must administer the trust solely in the interests of the beneficiaries. Importantly, the Trustee must be adept at identifying potential conflicts of interest and avoid the same at all costs. Choose a Trustee who is above all else, honest and transparent.

3.) A Trustee Should Be Financially Stable

The ideal Trustee is, at minimum, financially literate, but ideally, financially savvy. Never choose someone as Trustee who has a messy financial history or creditor issues, which could jeopardize his or her ability to administer the trust prudently and avoid conflicts of interest.

4.) A Trustee Should Be Emotionally Stable

The ideal Trustee is emotionally stable, reliable, and composed. Often, particularly with respect to beneficiaries who have addiction or spendthrift issues, the Trustee will encounter backlash if a beneficiary’s request for funds is denied (or approved but with restrictions the beneficiary does not like). The Trustee should be capable of standing up against difficult personalities while at the same time remaining calm and professional under pressure.

5.) A Trustee Should Be Emotionally Intelligent

Going one step further, a Trustee also should be emotionally intelligent. Emotional intelligence or “EQ” is the capacity to be aware of, control, and express one’s emotions, and to handle interpersonal relationships judiciously and empathetically.

6.) A Trustee Should Remain Impartial

If a trust has two or more beneficiaries, the Trustee has a duty to act impartially in investing, managing, and distributing trust property. In other words, the Trustee is not allowed to play favorites. This is especially important to consider when nominating a family member to serve as Trustee for other family members.

7.) A Trustee Should Be Available

Naming an individual who has all of the qualities described in this list as Trustee will not do any good if the individual is not available to serve in the role. For example, I’ve heard clients say, “My son is a successful stockbroker on Wall Street; he would be the perfect Trustee.” Maybe, but maybe not – depending on whether he has the time and availability to serve as Trustee in the first place. Similarly, I’ve heard, “My daughter is an incredibly intelligent physician; she would be the perfect Trustee.” In reality, she is probably overwhelmed with running her practice; also, intelligence in one area, such as medicine, does not necessarily translate to the emotional intelligence and financial savvy required to serve as an effective Trustee.

8.) A Trustee Should Be Willing to Seek Help When Needed

An individual Trustee should not be expected to fly solo; rather, the ideal Trustee is able to identify personal strengths and weaknesses and seek help when needed. For example, it is common for Trustees to employ “helpers,” such as attorneys, CPAs, accountants, and investment advisors, to guide them in fulfilling their fiduciary duties. Thus you should choose a Trustee who is not afraid to seek the expertise of professionals when appropriate.

For some clients, choosing an individual family member to serve as Trustee may offer advantages, particularly when the family member is familiar with family dynamics and values, has experience in law and finance, and may be willing to serve as Trustee for a discounted rate. On the other hand, choosing one family member as Trustee over another can enhance family discord and the perception of favoritism, particularly among siblings. In such a case, it may be more appropriate to choose a corporate fiduciary, such as a bank or trust company, to serve as Trustee. For example, a corporate fiduciary may be an ideal solution in a blended family situation, when there is known acrimony among beneficiaries, when the trust is expected to last for many generations, or when the estate contains complex assets, such as a closely held business.

A frequent initial objection to naming a corporate fiduciary as Trustee is the expense involved. Yes, it’s true that corporate fiduciaries are entitled to be paid for serving as Trustee, but so is Uncle Tony. Whereas the corporate fiduciary is experienced and heavily regulated, Uncle Tony likely is neither. Ultimately, if you are considering using a corporate fiduciary as Trustee, it is important to review the company’s fee schedule and find out if there is a minimum financial requirement. For example, many corporate fiduciaries require $1 million in assets under management to serve as Trustee.

In some cases, I recommend a combination approach. For example, if there is a family member who has an affinity or special way of dealing with an otherwise difficult beneficiary, and the family member is honest and loyal, but not necessarily financially savvy, consider naming the family member to serve as Co-Trustee with a corporate fiduciary. The individual Co-Trustee will manage the expectations and emotional volatility of the beneficiary and communicate the beneficiary’s needs to the corporate Co-Trustee, while the corporate Co-Trustee will ensure that investments are allocated properly and legal notices, accountings, and tax returns are filed on time. This combination approach can be a win-win for all involved.

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If Wills Do Not Avoid Probate, Then What Techniques Do Avoid Probate?

Joint Ownership with Right of Survivorship (JTROS)

• If Rick and Marty never married, then Marty will not inherit Rick’s 50% interest in the property by intestacy; rather, Florida law provides that Rick’s estate will pass to his family members in the following order: children and descendants, and if none, then to parents, and if none, then to siblings, and if none, then to more remote next of kin. The transfer of ownership of Rick’s property to his heirs at law would happen in the probate court.
• If Rick and Marty are married and neither ever had any children, then Marty will inherit Rick’s 50% interest in the property as Rick’s surviving spouse according to Florida’s intestacy rules via probate administration.
• If Rick and Marty are married but Rick has children from a prior relationship, Marty will not inherit 100% of the property, but he has some lesser options. First, Marty can take a “life estate” in Rick’s 50% of the property, meaning Marty can live there for his lifetime, but ultimately the property will pass to Rick’s children when Marty dies. Alternatively, Marty can elect to split Rick’s 50% property interest with Rick’s children, so that ultimately Marty owns 75% of the property (his 50% plus 25% inherited from Rick’s estate) and Rick’s children own the remaining 25% of the property. In these situations, it would be best for Marty to buy out Rick’s children’s 25% interest in the property so that he can continue to live there without interference from Rick’s children and sell the property when he pleases, without having to deal with Rick’s children as co-owners.

Beneficiary Designations

What If There Is No Beneficiary Designated on a Life Insurance Policy?

• If you do not have any descendants: 100% your spouse.
• If you have descendants who are also your spouse’s descendants: 100% your spouse.
• If you have descendants from prior relationships: 50% your spouse and 50% your descendants.
• If you are unmarried with descendants: 100% to your descendants.
• If you are unmarried with no descendants:
  • 100% your parents; or if none, then:
  • 100% your siblings; or if none, then:
  • 100% more remote next of kin.

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Irrevocable Life Insurance Trusts (ILITs) Provide Liquidity to Pay Estate Tax

Historical Federal Estate Tax Exemptions & Rates

Irrevocable Life Insurance Trust (ILIT) Mechanics

ILIT Example – Donna’s Estate

Fixing Old or Broken Irrevocable Life Insurance Trusts (ILITs)

• whether the client who established the ILIT is still living;
• whether the ILIT beneficiaries are in agreement with the proposed changes; and
• whether the Trustee of the ILIT is willing to cooperate.

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1.) Select Someone Trustworthy to Administer Your Estate

• Trustworthy;
• Organized;
• Available;
• Financially literate; and
• Neutral.

2.) Identify Your Family Members and Other Beneficiaries with Specificity

3.) State Your Wishes Regarding Disposition of Your Remains

• a statement that you wish to be cremated
• a statement that you wish to be buried
• a description of where you wish to be buried
• a reference to a prepaid funeral, burial, or cremation contract
• instructions regarding disposition of your ashes
• details regarding the contents of your obituary
• your wishes regarding funeral arrangements, music, invitees, etc.

4.) Identify and Distribute Your Tangible Personal Property

5.) Distribute Your Residuary Estate

What Assets Are Controlled by My Will?

Assets Titled as Joint Tenants with “Right of Survivorship”:

• For example, a husband and wife own their primary residence together as joint tenants with right of survivorship. If husband dies first, wife will simply continue to own the property by operation of law as the surviving joint owner; for chain of title purposes, wife need only record husband’s death certificate in the official records in the county where the property is located.
• Similarly, mother and daughter own a joint checking account with right of survivorship. Mother’s Will devises her residuary probate estate to both son and daughter. If mother dies first, daughter will simply continue to own the checking account by operation of law as the surviving joint owner. In this example, the terms of mother’s Will do not control the disposition of the joint account, and thus son has no right to the checking account by virtue of the Will.

Assets with “Pay-On-Death” or “POD” Beneficiaries:

• For example, father names son as “pay-on-death” beneficiary on his money market account. Father’s Will devises his entire probate estate to his longtime girlfriend. If father dies first, son will inherit the money market account as POD beneficiary; in this example, the terms of father’s Will do not control the POD account, and thus girlfriend has no rights to the account by virtue of the Will.

Assets with “Transfer-On-Death” or “TOD” Beneficiaries:

• For example, mother names charity as TOD beneficiary on appreciated corporate stock; her Will names her daughter as sole beneficiary of her probate estate. When a mother dies, the charity will inherit the stock; in this example, the terms of mother’s Will do not control the TOD stock, and thus daughter will have no rights to the stock by virtue of the Will.

Contractual Assets with Valid Designated Beneficiaries:

• For example, uncle names two nephews as 50/50 designated beneficiaries on his life insurance policy; his Will names charity as sole beneficiary of uncle’s residuary estate. When uncle dies, his nephews will inherit the insurance proceeds in equal shares; in this example, the terms of uncle’s Will do not control the beneficiary designated life insurance policy, and thus the charity will have no rights to the policy by virtue of the Will.

Assets Titled in Trust

Why Have a Will If I Can Put Joint Owners or Beneficiaries on All of My Assets?

Immediate Access by the Joint Owner

Exposure to the Proposed Joint Owner’s Creditors

Interference with Homestead Exemption

Beneficiary Issues

• are under the age of legal majority (age 18 in Florida)
• are immature and/or bad or inexperienced at managing money
• are in a rocky marriage and thus prone to divorce
• have addiction issues, including both legal and illegal drugs and alcohol
• have special needs, such as autism or significant learning disabilities
• suffer from a disability and receive needs-tested government benefits, such as SSI and Medicaid

• blended families (or not-so-blended families)
• tax planning for estates that exceed the federal estate tax exemption
• assets located in more than one state or country
• special needs beneficiaries

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• In 2019, Susan and Russell, a retired couple in their mid-70s, had taxable income of $200,000.00, of which $40,000.00 came from RMDs from their IRAs. They made $20,000.00 in charitable gifts from their post-tax income. They paid $8,000.00 in county property taxes, which is less than their combined standard deduction of $24,400.00, so they will not itemize and therefore cannot deduct the $20,000.00 in charitable gifts. In this scenario, they will pay approximately $30,500.00 in federal income tax.
• Same facts, but in 2018, Susan and Russell learned about making gifts using a Qualified Charitable IRA Rollover from their Estate Planning Attorney. Instead of using post-tax income to make their charitable gifts, they use $20,000.00 from Susan’s IRA to make the gifts, and they inform their CPA accordingly. Their taxable income will be reduced by the $20,000.00 QCD, and they will pay approximately $26,000.00 in federal income tax, meaning an estimated tax savings of $4,500.00!

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• Create an inter vivos trust;
• Amend, modify, revoke, or terminate a trust created by or on behalf of the principal (but only if the trust instrument also explicitly provides for amendment, modification, revocation, or termination by the agent);
• Make gifts over and above the federal gift tax annual exclusion;[viii]
• Create or change rights of survivorship;
• Create or change a beneficiary designation;
• Waive the right to be a beneficiary under certain annuities and retirement plans; and
• Disclaim property and powers of appointment.[ix]

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• Minor Children (under age 18 in most states); and
• Incapacitated Adults.

What is Probate?

What is Formal Administration?

What is Summary Administration?

Which Assets Are Subject to Probate?

• Individual checking/savings accounts with no “pay on death” beneficiary
• Individual brokerage accounts with no “transfer on death” beneficiary
• Stocks and bonds
• Real estate with no joint owner
• Real estate that is owned as “tenants in common”
• Retirement accounts with no “designated beneficiary” (or the designated beneficiary is deceased)
• Insurance policies with no “designated beneficiary” (or the designated beneficiary is deceased)
• Automobiles owned by individuals with no joint owner
• Tangible personal property (e.g. household appliances, furnishings, artwork, jewelry, etc.)

What is Joint Tenancy with Rights of Survivorship (“JTROS”)?

What is a Will?

What is a Living Will?

What does Intestacy mean?

What are Beneficiary Designations?

What Is a Durable Power of Attorney and When Do I Need One?

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