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JK Lasser's New Rules for Estate and Tax Planning, 4th Edition

ISBN: 978-1-118-16646-8
284 pages
September 2011
JK Lasser
A complete guide to planning an estate under today's tax rules

When it comes to an estate (no matter how big or small it may be) nothing should be left to chance. Proper planning is necessary to protect both your assets and your heirs. Estate Planning Law Specialists Harold Apolinsky and Craig Stephens and expert financial planner Stewart Welch III know this better than anyone else, and in the revised and updated edition of J.K. Lasser's New Rules for Estate and Tax Planning, they offer valuable advice and solid strategies to help you plan your estate under today's tax rules as well as preserve your wealth.

Packed with up-to-the-minute facts, this practical resource covers a wealth of important issues.

  • Reveals how new legislation will impact inheritances and trusts and offers guidance for estate and generation-skipping tax planning
  • Explains the role of wills, executors, and trusts and shows how to treat charitable contributions
  • Outlines the do's and don'ts of gifting and explains life insurance and retirement planning

Filled with in-depth insights and expert advice, this book will show how to efficiently arrange your estate today so that you can leave more to those you care about tomorrow.

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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® 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

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Stewart H. Welch III, AEP, CFP®, 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.

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