Golden Opportunities for 2012
Estate Planning Ideas That Will
Impact The Bottom Line!
June 14, 2012
By: John P. Dedon
Odin, Feldman & Pittleman, P.C.
9302 Lee Highway, Suite 1100
Fairfax, Virginia 22031
(703) 218-2131
John.Dedon@ofplaw.com

Investment
Income
Inheritance
Wages
Qualified Plans
Closely Held
Business
1

Assets At Risk (4 Areas of Risk)
Potential Creditors
3-6% Probate & Legal Expenses
35% Income Tax
IRS
Estate Tax
(?)
2

Proper Planning Will Allow You to . . .
Give what you have,
To whom you want,
When you want, and
In the way you want
And Pay Less for:
Court Costs
Attorney’s fees
Estate Taxes
3

Other Fundamental Planning Issues
• Children from a previous marriage and second spouse
• Children with special needs
• Children with creditor, financial, or marital problems
• Property in multi-states
• Competency issues in future (parents)
• Spouse who would need help managing and investing funds
4

Assets Passing Without a Will Go
Through Probate
Assets Passing With a Will Go
Through Probate
5

Cost
Time Delays
Publicity
Property In Multiple States
Hassle
Avoid Probate With Revocable Trust
6





Wills
Revocable Living Trusts
Advanced Medical Directives (Living
Wills)
Powers of Attorney
7

Estate Tax :
Year
2010
2011 and 2012
2013
Exemption Amount
No estate tax*
$5 Million**
$1 Million***
? - What will Congress do?
*Income Tax
**35% Estate Tax Rate
***55% Estate Tax Rate
8

IRS
MONTH
9
9

$ 13,000 Annual Exclusion
2011 and 2012 - $5 Million
2013 - $1 Million
10

Dad
Mom
2 Children
11

•
•
•
Married
$10 Million +
Equity in closely held business, real estate, retirement plans, other liquid assets, life insurance
12

Assets
$ 1,500,000
$ 800,000
Retirement
Liquid
$ 450,000 $100,000
$10,000,000
Insurance $ 2,000,000 $250,000
Closely Held Business $12,000,000
Total $14.450,000 $350,000 $12,300,000
Grand Total = $10 million +
13

•
•
•
•
•
•
Provide for surviving spouse
Provide for children at second death
Eliminate probate
Eliminate or avoid estate tax
Eliminate or avoid estate tax in perpetuity
Asset protection to protect children from divorce, creditors
14

• Wills, Revocable Trusts with credit trust and marital trust for surviving spouse,
Powers of Attorney and Medical
Directives.
15

•
•
•
•
Focus on $10 million of marketable securities
Spousal access Trusts
Each spouse transfers his and her own assets to the other’s Trust
Use exemption amount and file gift tax return
16

Grantor
Trustee
Wife’s Trust
$5 Million
Beneficiaries =
Wife and Children
17

Grantor
Trustee
Husband’s
Trust
$5 Million
Beneficiaries =
Husband and Children
18

•
•
•
Estate and GST Exemption Applied - $10
Million + Appreciation Estate Tax Free
Asset Protection
•
•
Each Other
Children
Access
19

•
•
•
Divorce
Death
Legal Issues
•
•
Support
Reciprocal Trust
20

• Wills, Revocable Trusts with credit trust and marital trust for surviving spouse,
Powers of Attorney and Medical
Directives.
21

•
•
•
Focus on $12 million closely held business
Husband transfers discounted non-voting stock to Trust, per appraisal
Use $10 million exemption amount even though his name (gift splitting)
22

Grantor
$1.2 Million
10% Equity
100% Voting = 100% Control
100% of Non-voting stock
(90% of Equity)
Trustee
Trust
$10,800,000
Before
Discount
Beneficiaries =
Wife and Children
23

•
•
•
•
•
Estate and GST Exemption Applied - $10
Million + Appreciation Estate Tax Free
Asset Protection
•
•
Each Other
Children
Access
Husband has control through voting stock and access Trust during marriage
Wife is Trust beneficiary
24

•
•
Divorce
Death
25