SAMPLE of an Action Checklist
00-00-0000
for Mr. & Mrs. Client
Status
Action
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 Ideal Plan Goals - Identified and Prioritized
o Ages for children to have significant access to wealth…35 – 40 – 45 ?
o Never force monies out of trust for them …Hold in a Dynasty Trust?
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 Wills
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Update Wills
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Ensure you have proper Wills established with A/B type trusts to take full advantage of each spouse’s
Unified Credit (currently $_______ per spouse) no matter the order of survivorship
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Ensure you have proper Wills established with “kiddie provisions”
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Also, each spouse should consider implementing the following documents:
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Durable Powers of Attorney
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Durable Medical Powers of Attorney
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Living Wills
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HIPAA Authorization Forms
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Choose executor and trustees
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See also “Nautilus Document Summaries and Memo Comments”
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Fulfill distribution goals and objectives
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Ensure proper continuity with current law
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A/B Trusts can save up to $1,845,000 in estate and state taxes, over a simple Will
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Enough assets in each Mr. and Mrs.’s name individually
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 Beneficiary Designation
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Review and update beneficiary designations of all annuities, pension / retirement plans, and life
insurance.
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Provide SFG a copy of the beneficiary designation for investments or insurance not held with SFG
 Asset Titling
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Consider re-titling your SFG account (currently Joint WROS) into Joint TIC so each spouse will have
enough assets to fully fund a By-Pass Trust no matter the order of survivorship
 Charitable Remainder Trust (CRT)
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Consider adding CRT to both of your new Wills
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6% for 20 years
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Change beneficiary designations of all qualified pension plans:
Primary – Spouse; Secondary – CRT
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At the first death, your qualified plan assets will rollover to the surviving spouse
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At the survivor’s death, the qualified plan assets will pass to the CRT trust and payout 6% to your heirs
for 20 years. Then, the balance will pass to the charities of your choice
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Could save up to $235,000 in estate and IRD taxes
 Charitable Lead Trust (CLT)
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Add provisions for a CLT in your Wills
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At the second death, all assets can pass to the CLT
The term can for the least amount of time to save the maximum in estate taxes
Assumed a 2-layer term of 7 & 15 years
The CLT will payout 6% of the initial balance to Charity annually
Then, upon the end of the CLT term, all assets will pass to your heirs
This CLT is designed to minimize estate taxes, which would save about $2,059,000
Use a Master Buy-Sell with estate and LP…have note going into LT
 529 Plans
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Could consider establishing 529 College Saving plans for each of your children
 Land Limited Partnerships (LP)
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Establish an LP to hold all current land
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Mgt LLC can be 1% General Partner and Mr. & Mrs. Client can each be 49.5% Limited Partner
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Complete warranty deeds to retitle land into LP (do not transfer parcels containing home, shop, and
other buildings). Do two (2) warranty deeds: one to retitle a 1% interest in all land from Mr. & Mrs.
Client to Mgt LLC, and another to retitle all land from Mgt LLC and from Mr. & Mrs. Client to the
Land LP
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Establish lease agreements for rent (review prior years farm income to determine amounts)
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Apply for EIN #
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Set up checking account
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If client has other passive income sources, review passive and non-passive income tax issues, as well as
farm loss restriction issues
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Ensure total debt on land is not in excess of total basis (if transferring loans to LP also—transfer land
loans only)
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If/when any of this LP will be gifted, include “Gifted Partnership Units: 30-Day Put Right” language in
document
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Also, if gifted outright to individuals, need to prepare gift assignment of LP interests and crummey
notices
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Valuation discounts for minority interest and marketability could save $2,800,000 in estate and MN
taxes (assuming a 25% discount)
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Liability protection, Protection against creditors and predators
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Ease of income and expense management
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Estate transfer and equalization benefits
 Farm S-Corp
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Establish an S-Corp to run your farming operation
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Apply for EIN #
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Reduce self employment taxes
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Liability protection
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Estate transfer and equalization benefits
 Machinery LLC
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Establish a Limited Liability Company (LLC) to hold all farm machinery
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Apply for EIN #
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Asset and creditor protection
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Estate transfer and equalization benefits
 Master Entity (LLC)
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Create a Master Limited Liability Company (LLC) to hold General Partnership units of the LP
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Mr. and Mrs. Client can each own 50% of the LLC interests
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Apply for EIN #
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Asset and creditor protection
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Control
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Estate transfer and equalization benefits
 Buy-Sell Planning
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Set up buy-sell plan with Son
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Ensure buy-sell plan is properly funded
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Advantages:
 Proper distribution of assets at death
 Minimize and leverage funds to ensure future farm continuation
 Spousal Support Trust (SST) - Mr.
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Draft and establish an SST document
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Mr. will be grantor
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Mrs. and children will be beneficiaries
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Apply for EIN #
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Set up separate checking account in name of grantor only to fund the trust, so assets will not be
included back in estate
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Gift/Loan about $100,000 to the trust annually
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The gifts can be leveraged into a tax-free cash death benefit
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At Mr.’s death, Mrs. will have access to the income from the trust
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At both of your deaths, all your children will receive the cash benefits tax-free
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A gift tax return may be required, consult SFG or your accountant
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Provide income for surviving spouse
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Shift assets out of estate, which will help reduce estate taxes
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Leverage of funds out of estate, heirs will receive tax-free cash benefits
 Spousal Support Trust (SST) - Mrs.
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Could also consider another SST for Mrs.
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Mrs. will be the grantor
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Mrs. and children will be beneficiaries
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Apply for EIN #
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Set up separate checking account in name of grantor only to fund the trust, so assets will not be
included back in estate
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Gift/Loan about $100,000 to the trust annually
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The gifts can be leveraged into a tax-free cash death benefit
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At Mr.’s death, Mrs. will have access to the income from the trust
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At both of your deaths, all your children will receive the cash benefits tax-free
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A gift tax return may be required, consult SFG or your accountant
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Provide income for surviving spouse
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Shift assets out of estate, which will help reduce estate taxes
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Leverage of funds out of estate, heirs will receive tax-free cash benefits
 Irrevocable Family Trust (IFT)
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Draft and establish an IFT document
Children and/or grandchildren to be beneficiaries
Gift/Loan funds to the trust annually
Apply for EIN #
Can use a joint checking account to fund the trust
Set up trust checking account
Gift/Loan about $100,000 to the trust annually
The gifts can be leveraged into a tax-free cash death benefit
At both of your deaths, all of your children will receive the cash benefits tax-free
A gift tax return may be required, consult SFG or your accountant
Shift assets out of estate, which will help reduce estate taxes
Leverage of funds out of estate, heirs will receive tax-free cash benefits
 Current Life Insurance
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Review current life insurance in estate
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Transfer any life insurance on Mr. and Mrs.’s life (that will be kept) to their SST(s) out of the estate
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Review cash value if any and consider gifting issues before any transfers
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Shift assets out of estate, which will help reduce estate taxes
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Save 50% of the death benefit, which could be lost to estate and MN taxes if in the estate
 Split Dollar
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Can consider Split Dollar loans for a portion of the gifts made to the SST and/or IFT trusts that will be
in excess of the current annual exclusion limits
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Funds loaned to the trusts need to be tracked annually with promissory notes and managed properly
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Draft and sign split dollar agreement document.
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Draft and sign collateral assignment document and file with the insurance company.
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Draft and sign promissory note for the loan.
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If EOLI on employee/partner, or if paid by an employer/partnership on employee, make sure EOLI
Consent form is completed and form 8925 filed each year with employer’s tax return
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If economic benefit method used, make sure split dollar consent form is signed and filed with each
party’s tax return each year.
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Eliminate any potential gift taxes
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Maintain access to the funds in future if needed for Mr. and Mrs.’s living needs
 Reorganize Stock
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Reorganize/Recapitalize stock into voting and non-voting shares
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Control
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Asset and creditor protection
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Valuation discounts
 Beneficiary Defective Trust (BDT)
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Draft and establish a BDT Trust
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Someone other than Mr./Mrs., can be the grantor
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Mr. can be the trustee and beneficiary
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Apply for EIN #
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Set up trust checking account
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Grantor contributes $5,000 to the trust. Hold funds in trust. Must be done before gift and sale
documents are completed.
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Provide SFG a copy of the check
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Then, Mr. can sell assets to the trust and receive a note back
Complete Bills of Sale to transfer all asset interests to the spouse that will make the gift/sale
Complete promissory note(s) - All note terms should be less than the life expectancy of the grantor or
there could be an implied retained interest at death that could cause the trust assets to be included in
the grantor’s estate
Draft guarantee document to guarantee the trust note until 10% equity in trust. Consider a 5%
Guarantee fee on 25% of the note
Mr. and Mrs. can choose the ultimate beneficiaries of the trust
A gift tax return will be required for the grantor/donor, consult SFG or your accountant
Access to income until death, assets available for your use
Flexible through use of “power of appointment”
Ability to manage and control the property during lifetime
Protected from creditors and predators
Reduce estate taxes
Other BDT Considerations (D.O. Recommendations)
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Trust Co. be Independent Special Trustee (IST)
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IST should initiate all sale actions and any insurance actions.
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Must include language saying that beneficiary/trustee has no power of appointment over
insurance proceeds
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Must have an independent “family” trustee to make discretionary distributions
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Must sell assets to the trust for a reasonable consideration. Discounts are not as much of an
issue with the BDT because of the “tax burn”
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Grantor gift no more than $5,000
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Do crummey for $5,000 grantor gift. Must give the beneficiary the power of withdrawal over
the property.
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Disclose sale in a gift tax return (non-gift transaction) to start statute of limitations
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Use an appraiser (provide net worth statement of guarantor) to determine the amount of
guarantee fee. Have guarantor represented by independent counsel
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Must pay interest on the note…Have trust borrow funds if money is not available
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Single-member LLC’s work best to transfer to a BDT
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Use guarantors appraised net worth to help determine guarantee fee
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Cannot refinance BDT notes unless it generally cannot be repaid
 Intentionally Defective Irrevocable Trust (IDIT)
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Draft and sign IDIT trust document
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Spouse to be trustee
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Spouse and children to be beneficiaries
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Apply for EIN #
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Set up trust checking account
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Complete Bills of Sale to transfer all asset interests to the spouse that will make the gift/sale
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Complete promissory note(s) - All note terms should be less than the life expectancy of the grantor or
there could be an implied retained interest at death that could cause the trust assets to be included in
the grantor’s estate
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Do a combined gift and sale of the Land LP to trust
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Determine how trust assets will be distributed, once grantor status terminates
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Appraise the land
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Appraise the Land LP
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File a gift tax return
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Assuming a 25% discount on these assets, save estate taxes of $270,000 now and all future growth of
the land will be outside your estate
Access to income, assets available for your use
Ability to manage and control the property during lifetime
Protected from creditors and predators
Reduce estate taxes
 Portfolio Management and Review
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Transfer liquid portfolio account to SFG for management and review
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Engagement formula
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Reallocate $________ to _________
 Have $____ Million+ in liquid assets by age 65 (separate from the business)
 Diversify and Growth
 Engagement Formula
 Periodic reviews
 Guaranteed Service Agreement
 Master Plan Management & Tax Planning and Preparation
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Engage us to properly manage your entire Master Plan with quarterly and annual reviews, which is
incorporated into your whole plan to manage and measure progress and ensure everything is being
maintained properly
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Integrate your tax return planning and preparation into you Master Plan by engaging us to do your
planning and prep
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Periodic reviews – “Guaranteed Service Agreement”
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Engagement formula
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Integrate tax with complete Master Plan and management
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Reduced annual tax costs