J. K. Lasser's New Rules for Estate and Tax Planning

Stewart H. Welch III, AEP, CFP(R), is a nationally recognized financial advisor who is widely quoted in the press including Money magazine, the Wall Street Journal, Worth, and many other publications. He has served as Chair of the Disciplinary and Ethics Commission and as a member of the Board of Directors of the Certified Financial Planner Board of Standards, Inc. Mr. Welch's company, The Welch Group, is a fee-only money management and financial advisory firm in Birmingham, Alabama. Harold I. Apolinsky, Esq., EPLS, is a board-certified estate planning attorney with the law firm Sirote & Permutt, PC in Birmingham, Alabama. He previously taught estate planning at the Cumberland School of Law and the University of Alabama Law School. Craig M. Stephens, Esq., LLM, is co-chair of Sirote & Permutt, PC's Estates, Wills, and Trusts practice group in Birmingham, Alabama. His practice focuses on representing individuals in the estate planning process, with a focus on tax-minimization strategies. He is an adjunct professor of estate planning and estate and gift taxation at the Cumberland School of Law.

Acknowledgments ix Introduction xiii 1. Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 1 Marginal Ordinary Income Tax Rates 2 Capital Gains Tax Rates 3 Educational Provisions 3 Business and Corporate Tax Relief 8 Estate, Gift, and Generation-Skipping Transfers 8 2. Estate Planning: You Need It-Here's Why 13 What Is Estate Planning? 13 The Benefits of Estate Planning 15 The Nightmares of Poor Planning 16 The Myths of Estate Planning 17 Guidelines for Successful Estate Planning 18 3. The Estate Tax System: How Much Are You Really Worth? 21 Determining Your Estate Net Worth 21 Understanding the Estate Tax System 21 Your Estate Tax Picture 27 Your Future Estate 30 Overview of Estate Planning Strategies 30 4. Investment Strategies for Maximizing Estate Growth 32 Growth Strategy with a Safety Net(R) 33 Prioritizing Your Investment Dollars 37 Retirement Planning: Choosing the Best Investment Environments 38 Some Final Thoughts on Investing 46 5. Retire with Dignity: How Much Is Enough? 47 Your Retirement Requirements 47 6. You Don't Have a Will? Big Trouble! 60 Property Transfers at Death 61 Transfers via Probate 61 Direct Transfers by Title 64 Other Methods of Property Ownership 68 Choosing the Best Methods of Ownership 69 Setting Estate Planning Goals 70 7. Where There's a Will, There's Your Way! 72 What Is a Will? 72 Types of Wills 72 Advantages and Disadvantages of Wills 74 Intelligent Decisions Concerning Your Will's Basic Provisions 76 Executing Your Will 86 Where to Store Your Will 86 Other Important Documents 87 Working with Your Attorney 90 When to Review Your Estate Plan 95 8. Using Trusts in Your Estate Plan 98 The Credit Shelter Trust Will 99 Disclaimers 103 Marital Trusts 104 Spendthrift Trust 108 Standby Trust 109 Other Trusts 109 9. Understanding the Living Trust 110 Advantages of Living Trusts 110 Disadvantages of Living Trusts 112 How a Living Trust Operates 113 Transferring Property into Your Living Trust 115 Types of Property Likely to Be Transferred 118 Living Trust Myths 120 Transacting Business with Your Trust 122 10. Using Insurance in Your Estate Plan 123 Life Insurance 123 Using Life Insurance to Replace Income 125 How Much Life Insurance Do You Need? 126 What Type of Life Insurance Is Best for You? 129 Insurance on a Homemaker 129 Insurance on Adult Children 129 How to Get the Best Deal on Term Life Insurance 130 Insurance Warnings! 130 Using Life Insurance for Estate Liquidity 131 How Much Is Enough? 132 What Type of Life Insurance Is Best for Estate Liquidity? 132 The Irrevocable Life Insurance Trust 134 Getting Your Life Insurance into Your Trust 135 Using Life Insurance to Leverage Your Estate 137 About Your Cash Values 139 Long-Term Care Insurance 141 11. Smart Strategies for Gifting Assets to Family Members 144 The Annual Gift Tax Exclusion 144 Unintended Gifts 145 Filing a Gift Tax Return 146 The Lifetime Applicable Exclusion Amount 147 Outright Gifts 147 When the Donee Is a Minor 149 Other Tax-Free Gifts 152 Family Gifts Utilizing Trusts 152 Grantor Retained Annuity Trust 153 Grantor Retained Unitrust 154 Qualified Personal Residence Trust 154 Taking Advantage of Generation Skipping Transfers 159 Sales to Family Members 161 Loans to Family Members 164 The Legacy Trust 164 12. Strategic Planning with Charities 173 Outright Gifts to Charities 174 Testamentary Gifts to Charities 176 Gifts Using Charitable Trusts 176 Using Your Charitable Trust for Retirement Planning 179 The Private Foundation 182 13. Family Limited Partnerships 186 General Structure of the Family Limited Partnership 186 Family Limited Partnership Rules 191 14. Succession Planning for the Family Business or Farm 197 Special Estate Tax Benefits for Farmers and Closely Held Business Owners 199 Valuing Your Business or Farm 200 Succession or Sale? 201 Succession Planning: Keeping the Family Business in the Family 201 Maximizing Your Business's Value through a Sale 202 Structuring Your Buy-Sell Agreement 203 Types of Buy-Sell Agreements 204 Funding the Buy-Sell Agreement 205 One Final Strategy-The Employee Stock Ownership Plan 206 15. Asset Protection Strategies 208 The Concept of Fraudulent Transfers 209 A Word about Jointly Held Property 212 Retirement Plans 212 Life Insurance 214 Using Trusts to Protect Assets 214 Using Limited Liability Entities to Protect Assets 216 Use of Multiple Limited Liability Entities 218 Foreign Asset Protection Trusts 219 Domestic Asset Protection Trusts 221 16. Personal Business Planning Issues 223 Choosing the Right Entity for Your Business 223 Closing Thoughts 233 Importance of a Business Plan 235 Epilogue-Dealing with Parents and Their Money 237 Appendix A-Professional Advisors 239 Appendix B-Estate Planning Terms 243 Appendix C-IRS Life Expectancy Table 248 Index 251