Planning Your Estate: What's Right for You?
August 7, 2019 ~ 5:00PM 6:00PM
Presented by Attorney Beth Fanous
Spellman, Kelly & Fanous LLC
133 Mountain Road
Suffield, CT 06089
office: 860-668-6476 x303
Bio for Attorney Beth Fanous
Attorney Beth Fanous is a Partner with the law firm Spellman, Kelly & Fanous LLC based in Suffield, Connecticut. She has been practicing law for 16 years and is licensed in Connecticut, Massachusetts and New York. Beth's practice focuses on estate planning, including wills and trusts, probate, business law, and general legal counsel. She is also a freelance author of estate planning resources for Connecticut lawyers published by LexisNexis Lexis Practice Advisor®.
Prior to joining Spellman, Kelly & Fanous LLC Beth practiced as a sole proprietor in her current fields, served as a Senior Attorney with United Technologies (Carrier, UTC Power), In House Counsel for the International Corporate Headquarters of Habitat for Humanity, Associate with the Manhattan office of the law firm Skadden, Arps, Slate, Meagher & Flom LLP, Judicial Extern for the United States District Court for the E. District of LA, and Intern with the law firm Halloran & Sage LLP in Hartford.
Beth graduated magna cum laude from Boston College and cum laude from Tulane Law School where she served as Managing Editor for the Tulane Law Review.
~Please do not hesitate to call Beth directly on her mobile phone for more information or to schedule an individualized appointment about your estate planning needs~
ESTATE PLANNING ~ THE BASICS
"Bird's Eye View"
HOW DO ASSETS PASS AT MY DEATH?
TRANSFER OF ASSETS:
- Title held in SURVIVORSHIP (e.g. a home? Other jointly held/survivorship assets)
- BENEFICIARY designation (e.g. bank account Pay-On-Death/Transfer-On-Death beneficiary)
- TRUSTS Legal entity to hold assets based on specific directions (to be discussed)
- PROBATE Court involved process to distribute your assets based upon your WILL
-- Note, your "Executor" is the person named
in your Will to carry out your directions
- Your will does not affect assets passing outside of the probate process, like survivorship, beneficiary or trust assets (to be discussed);
- Your estate plan should be comprehensive
DURABLE POWER OF ATTORNEY
- Legal document that will allow another person (your "agent") to conduct your affairs
- Durable vs. Springing Powers of Attorney
- Automatically revoked at death
- Update every 5 years
- If no Power of Attorney, Conservator appointed through Probate Court
- New laws in CT effective as of now. More protections for you; more incentives for financial institutions to accept Powers of Attorneys; more responsibility for your agents;
- Consider broad gifting authority ramifications, like allowing your agent to make gifts from your estate to "spend down" your estate for long term care planning
HEALTH CARE INSTRUCTIONS
- Allows another person to talk to your doctor and see your medical records
- Allows another person to make health care decisions for you if you cannot
- Your wishes regarding withdrawal of life support if you are dying or in a permanent coma and being kept alive by artificial means
- Organ donation
- Custody of remains
- It can be confusing when people hear references to various docs: "Health Care Proxies", "Health Care Powers of Attorney", "Living Wills", "Advanced Directives", "HIPPA Releases", etc. All of these materials enable you to document your wishes regarding your health care. We combine all such types of directives in one document for convenience and ease of administration..your HEALTH CARE INSTRUCTIONS
TAXES AND YOUR ESTATE PLAN
Federal Death Taxes
- Unlimited Marital Exemption
- Death Tax Exemption of $5 million per person; portable between spouses
- Gifting limit per person per year without having to file gift tax return ($15,000)
Connecticut Death Taxes
- Unlimited Marital Exemption
- Total Exemption of $3.6 million (MA at $1 million)
- No portability (use of trusts, to be discussed)
- Your TAXABLE ESTATE includes: SURVIVORSHIP assets, assets with BENEFICIARY designation, TRUST assets (most, not all), PROBATED assets. A practical rule of thumb: the tax rules will typically favor INCLUSION of assets when determining your taxable estate to maximize taxing authority;
- Your taxable estate is not the same as your probate estate;
- Generation Skipping Taxes: tax on transfers to grandchildren/grand nieces/nephews. Usually relevant with larger estates
USES AND BENEFITS:
- Tax Reduction (estate reduction, maximizing the credit, insurance trusts)
- Blended Families
- Control of Your Assets after Death and "keep it in the family" provisions
- Care for Minors/People with Special Needs
- Other Uses to Consider: Out of State Property/Vacation homes, charitable donations, businesses/asset management
Example of How a "Credit Shelter Trust" works:
*Note, using $3.6 million as exemption amount per person; simplified for illustrative purposes
Joe and Jane Doe are a CT married couple with a combined $7.2 million taxable estate. (Each has $3.6 million)
A No-Tax-Planning Scenario: John dies and his entire $3.6 million passes to Jane. Due to the spousal exclusion, there is no tax due. Jane now has a $7.2 million estate. Subsequently, upon Jane's death: $3.6 million of the estate is exempt; taxes will be due on the remaining $3.6 million, which is approximately $280k.
Alternate Scenario with a Tax-Credit-Shelter-Plan in Place: John dies and $3.6 million goes to a credit shelter trust. No tax due because below the exemption amount. Jane gets income from credit shelter trust for life; can access principal if needed. Upon Jane's death her $3.6 million passes tax free because not above the exemption amount. (Credit shelter passes to children, or as otherwise specified) The result is no estate tax.
- Note "ILIT", "Crummey" Trusts to shelter life insurance proceeds-safe harbor available
- Trust MUST BE FUNDED; doesn't happen by simply listing assets in the Trust Agreement. Minimally, Will "pours" into Trust
- One Trust--You shouldn't need separate Trusts to accomplish various purposes; Trust should be highly individualized to meet all of your needs
- See attachment for the "flow" of how credit shelter trust works