1 cushing & dolan, pc. affordable estate planning with joint trust for medium size estates and...
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Cushing & Dolan, PC.Cushing & Dolan, PC.Affordable Estate Planning with Joint Trust for
Medium Size Estates and Large Retirement PlansA PowerPoint Presentation
By
Leo J. Cushing, Esq., CPA, LL.M.Cushing & Dolan, P.C.
Attorneys at Law24 School Street, Suite 300Boston, MA 02108-5113
Tel: 617-523-1555 Fax: 617-523-5653
November 15, 2004The Boston Security Analysts Society
CHICAGO500 N. Michigan Ave., Suite2000Chicago, IL 60611T: 866-692-1556 (Toll Free)F: 708-246-3864
WILMINGTON 187 Ballardvale StreetSuite A180Wilmington MA 01887T: 978-988-1222F: 978-988-1223
WESTBOROUGH 276 Turnpike Road Westboro MA 01581 T: 508-870-1666 F: 508-870-1818
NORWOOD 520 Providence Hwy. Route 1 - Suite #10 Norwood MA 02062 T: 781-278-9901 F: 781-278-9911
CHESTNUT HILL 1330 Boylston Street Chestnut Hill, MA 02467 T: 617-264-7999 F: 617-264-4445
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Estate Planning PhilosophyEstate Planning Philosophy
User Friendly – Spouse as Trustee
Inexpensive
Understandable
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Planning in the Twilight ZonePlanning in the Twilight Zone
Year Mass. Exemption Federal Exemption
2003 $700,000 $1 million2004 $850,000 $1.5 million2005 $950,000 $1.5 million2006 $1 million $2 million2007 $1 million $2 million2008 $1 million $2 million2009 $1 million $3.5 million2010 $1 million No Federal Estate Tax
2011 $1 million $1 million
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Estates BetweenEstates Between$1,000,000 & $3,000,000$1,000,000 & $3,000,000
and Large IRAs and Large IRAs
Recommend using a joint trust
Revenue Rulings
-- 200101821
-- 200110051
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Estates BetweenEstates Between$1,000,000 & $3,000,000 $1,000,000 & $3,000,000 and Large IRA’s (con’t)and Large IRA’s (con’t)
Step-by-Step Analysis
Husband & Wife are Donors and Trustees
Surviving Spouse is Sole Trustee
Children are Trustees Upon Death of Survivor
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Estate Tax TreatmentEstate Tax Treatment
All trust assets are includible in estate of first spouse to die
Deceased spouse assets includible under §2038 (revocable)Surviving Spouse Assets includible under IRC§2041 General Power of Appointment
Trusts break down into 3 shares
– Federal Marital– Mass. Marital (QTIP)– By Pass
Federal Marital - income and principal to spouse upon request
Mass Marital - income to spouse for life. Principal payable to spouse to maintain health and support
By Pass - income payable to spouse for life. Principal to Spouse and issue for health,
education, maintenance and support. (May include NON support distributions if co-Trustee
is named)
Death of Surviving Spouse - Trust divides into as may equal shares as there are children living; and children deceased leaving issue.
Surviving Spouse does not have retained interest so By Pass assets are not includible.
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Pre-Death FundingPre-Death Funding
Joint Assets Transferred directly to the Trust
Use Social Security Number
Real Estate Transferred to the Trust
Retirement Plans payable to spouse with trust as contingent
Costs $2,500 - $3,500
No need to re-allocate based on rising exemptions
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Not appropriate for estates Not appropriate for estates in excess of $3,000,000in excess of $3,000,000
For estates in excess of $3,000,000 - two trusts - one for the husband and one for the wife are recommended.
Assets allocated equally but always fractionalized ownership interests using Real Estate and LLC's for equities.
Marital share must be QTIP with co-trustee to assure favorable
discount planning on the 1st death and on the 2nd death.
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ExampleExample
A 10 million dollar estate with a 35% discount will save $1,750,000 in estate taxes, with no significant loss of control.
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Key to EfficiencyKey to Efficiency
February 11, 2004
Mr. and Mrs. John Q. Public65000 Pennsylvania AvenueAnywhere, USA 91101
RE: Estate Planning Information Request Dear Mr. and Mrs. Public:
Thank you for selecting Cushing & Dolan, P.C. We have received your signed engagement letter and look forward to completing your estate plan. In order to make this process move efficiently and avoid unusual circumstances, it is important that you provide us with the following documents and information prior to our next meeting:
(1) Deeds: Copies of the most recent deed(s) for each property you wish to transfer to your trust(s). Please note that we will not be undertaking a title examination. If you cannot find a copy we can obtain a copy of the most recent deed from a Massachusetts Registry at a cost of $100 per deed.
[Optional] Please note we have already received a copy of the deed for {PROPERTY} dated {DATE}.
(2) Investment Statements: Copies of most recent statements for investment accounts showing the
names on the accounts and account numbers you wish to transfer to your trust(s) as discussed in the engagement letter, as well as the name, address and telephone number of the investment advisor(s).
(3) Change of Beneficiary Forms – Retirement Plans: Verification of existing beneficiaries of retirement
plans and blank change of beneficiary forms for each retirement plan, including IRAs, 401(k) plans, tax deferred annuities, and the like that you wish to change the beneficiary designation, according to the
engagement letter.
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(4) Change of Beneficiary Forms – Life Insurance: Verification of existing beneficiary designations and blank change of beneficiary and owner forms for each life insurance policy owned and/or controlled by you as well as contact information for the life insurance agent, if any, that you wish to make payable to the trust(s) as specified in the engagement letter.
(5) Homeowner’s Hazard Insurance: Provide the name, address, and telephone number of the Homeowner’s or other property insurance carrier, and of the insurance agent, for each property owned. The realty trust will become an “additional insured” on each policy. Also, if possible, please send a copy of the Coverage Selection page for each policy.
(6) Title Insurance: If insured, provide the name, address, and telephone number of the insurance agent and the name of the Title Insurance company for each property owned. Also please provide a copy of the title insurance policy.
If you have any questions concerning this, please contact us by phone or by e-mail at any time. We will
be sending you a draft of your estate planning documents under separate cover. If you do not send this information to us prior to our next meeting, additional costs may be incurred if you wish to fund your trusts with the above assets. A self-addressed envelope has been provided for your convenience.
Thank you. Very truly yours,
{Name of Paralegal}{Telephone}{e-mail address
cc: Referral Source