truth about estate planning pauly law offices, inc. arthur j. pauly, jr. jd what you should know...

Truth About Estate Planning

Pauly Law Offices, Inc.

Arthur J. Pauly, Jr. JD

What You Should KnowBefore You See An Attorney

The Day After Your Estate is Settled

Stewardship

1 Timothy 5:8

“…but if any provide not for his own, and specifically for those of his own house, he hath denied the faith, and is worse than an infidel.”

Stewardship

Matthew 25:42

42"Therefore keep watch, because you do not know on what day your Lord will come. 43But understand this: If the owner of the house had known at what time of night the thief was coming, he would have kept watch and would not have let his house be broken into. 44So you also must be ready, because the Son of Man will come at an hour when you do not expect him.

Definition of Christian Estate Planning• Wisely managing and controlling your property for

you and your loved ones while you are alive and competent

• Providing for your care and the care of your loved ones in the event of a physical or mental disability

• On your death, giving what you have to whom you want, the way you want, when you want, all at the least possible overall cost in taxes, court costs, attorney’s fees and administrative expenses, keeping Biblical principles in mind throughout

Proper Estate Planning

Caring for loved ones as if you were still there

• With your resources

• With your love

• With your wisdom

The Estate Planning Process

• Education• Design

• Drafting Documents

• Implementation

• Control my property while I’m alive and well;

• Plan for me and my loved ones if I become disabled

• Give what I have

–To who I want

–The way I want

–When I want

Estate Planning Defined

Common Planning Techniques

• Owning property jointly

• Designating a beneficiary

• Signing a will

Traditional Estate Planning

Gross Estate

Your Will

Non-probate transfers

Jointly owned propertyLife InsuranceIRA’s401(k)’sAnnuities

Planned Distributions

Property titled in your name

ProbateProcess

Traditional Will

• Hebrews 9:16,17

• 16In the case of a will, it is necessary to prove the death of the one who made it, 17because a will is in force only when somebody has died; it never takes effect while the one who made it is living.

Wills Can Fall Short of Estate Planning Goals

• Won’t provide for your disability

• Won’t necessarily give what you have:

– to whom you want

– the way you want

– when you want

• Certainly won’t avoid probate

Last Will of Jackie K. Onassis

The Living Trust

• It plans for your disability

• It plans for your loved ones

• Contains your loving instructions

• Its private and confidential

• Reflects your hopes, fears, dreams and values

• Its good in every state

How to Distribute to Your Heirs

• No protection

• Creditor protection• Predator protection• Self protection• Estate tax protection

• Outright

• In Trust

Disinheriting That One Relative

This should be done carefully.Disinheriting a Relative is a majorcause in the courts becoming involved in your estate.

Basic Estate and Gift Tax Rules

• It’s a tax on everything• Estate and gift taxes begin at 37%• $12,000 annual exclusion*• Unlimited marital deduction• $3,500,000 unified credit**• Unlimited charitable deduction• Use it or lose it

* Indexed for future inflation * * Varies depending on the year of death, goes to $1,000,000 In 2011

Tom’s WillTom’s Will

Tom’s Will Plan

CindyCindy

Peter, Paul& Mary

Peter, Paul& Mary

Tom’s WillTom’s Will

Tom’s Will Plan

$0 TaxCindyCindy

TAXES Peter, Paul& Mary

Peter, Paul& Mary

A Better Plan

$0 Tax

FamilyTrust

FamilyTrust

MaritalTrust

MaritalTrust

$0 Tax

Peter, Paul& Mary

Peter, Paul& Mary

$0 Tax

Tax savingCoupon

$0 Tax

Maximizing the Use ofthe Credit Shelter Exemption

• One dimensional planning

– All to spouse

– Wastes one unified credit

• Two dimensional planning

– Use of credit shelter trust on first death

– Saves a minimum of 500,000 in estate taxes

Do not try this at home!

• Prov. 11:14

“Where no counsel is, the people fall: but in the multitude of counselors there is safety.”

Prov. 15:22

“Without counsel purposes are disappointed: but in the multitude of counselors they are established.”

The Next Step

• Complete Estate Planning Worksheet

• Seek Competent Legal Counsel

• Pauly Law Offices • 916-207-7526