The Estate Planning Guide - Part 2

Per Capita or Per Stirpes?

Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

What Is the Difference Between a Per Capita and a Per Stirpes Distribution?

In making a will, the testator (person making the will) should indicate whether a per capita or per stirpes distribution of the residuary estate is desired.

Per Capita Distribution

All persons of equal relationship to the deceased, such as all grandchildren, receive equal shares of the residuary estate.

Per Stirpes Distribution

A group of estate beneficiaries, such as grandchildren, are entitled to an equal distribution of the share of the residuary estate that their deceased parent would have received.

ForExampl e‌ Mrs. A, a widow with three children (X, Y and Z) dies and leaves a $600,000 residuary estate. Two of Mrs. A's children, Y and Z, predeceased her, but had a total of four children of their own (GC #1, GC #2, GC #3 and GC #4). Depending on whether Mrs. A elected a per capita or per stirpes distribution of her residuary estate, who gets what?

VSA 2C1.11 ed. 09-12 Page 1 of 1

Who Gets What?

X Is Living

Y Is Deceased; One Child (GC #1)

Z Is Deceased; Three Children (GC #2, #3 and #4)

Per Capita Distribution

Share: 1/3 Amount: $200,000

Share: 1/6 Amount: GC#1 $100,000

Share: 1/6 each Amounts: GC#2 $100,000 GC#3 $100,000 GC#4 $100,000

Per Stirpes Distribution

Share: 1/3 Amount: $200,000

Share: 1/3 Amount: GC#1 $200,000

Share: 1/9 each Amounts: GC#2 $66,667 GC#3 $66,667 GC#4 $66,667

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

The Estate Probate Process Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

What Is Probate?

Probate is simply the Latin word for prove, which means that the estate probate process is the process by which your will is brought before a court to prove that it is a valid will. The courts charged with this responsibility are generally known as probate courts which, depending on where you live, may actually supervise the administration or settlement of your estate.

The probate process is governed by state statutes that are intended to accomplish three primary objectives:

1.

To preserve estate assets.

2.

To protect the rights of creditors in the payment of their claims before the estate is distributed to the heirs.

3.

To assure that the heirs receive their inheritance in accordance with the terms of the estate owner's will.

Once the estate's personal representative (executor or administrator if the estate owner died without naming a personal representative) is approved by the probate court and posts any bond that is required, the probate process generally proceeds as follows: The personal representative must "prove up" the will -- prove that it is a valid will signed by the estate owner who was competent and not under duress or influence at the time of signing.

 Notice must be given by the personal representative to all creditors to make prompt claims for any money owed to them by the estate.

 The personal representative must prepare and file an inventory and appraisal of estate assets.

 The personal representative must manage and liquidate estate assets as appropriate to pay all debts, fees and taxes owed by the estate.

 Finally, the remaining estate must be distributed to the heirs in accordance with the estate owner's will (or the state laws of intestacy if there was no will).

It is not uncommon for the probate process to require a year or more and considerable expense before the estate is finally settled. Proper planning, however, can serve to minimize the impact of the probate process on your estate and heirs.

VSA 2C1.13 ed. 09-12 Page 1 of 1

 VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

Avoiding Probate Presented by:

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What Steps Can Be Taken to Avoid or Minimize Probate?

Supervision of the estate settlement process by the probate court can result in additional expense, unwanted publicity and delays of a year or more before heirs receive their inheritance. The publicity, delays and cost of probate motivate many people to explore ways in which to avoid or minimize the impact of probating a will, including:

State Statute

Form of Property Ownership

Transfer On Death

Life Insurance

Lifetime Giving

If specific requirements are met, many states have made provision for certain estates to be administered without the supervision of the probate court, resulting in less cost and a speedier distribution to heirs.

The joint tenancy form of holding title to property allows ownership to pass automatically to the surviving joint tenant, who is normally the surviving spouse.

Many states have enacted Transfer on Death statutes that allow a person to name a successor owner at death on the property title certificate for certain types of property, including real estate, savings accounts and securities.

Unless payable to the estate, life insurance proceeds are rarely subject to the probate process.

Gifts given during life avoid the probate process, even if made shortly before death.

A "Totten" trust, which is a bank savings account held in trust for a named individual, can be used to pass estate assets at death outside of the probate process.

Trusts A revocable living trust, created during the estate owner's lifetime, can be an effective way to avoid the expense and delay of probate, while retaining the estate owner's control of his or her assets prior to death.

Any potential method of avoiding probate should be evaluated in terms of its income and/or estate tax consequences, as well as its potential impact on the estate owner's overall estate planning goals and objectives.

VSA 2C1.14 ed. 09-12 Page 1 of 1

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

The Estate Analysis Process Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

How ItW or ks…

YOUR ESTATE

IN-DEPTH FACT FINDING

ASSET REVIEW

TRANSFER METHODS

Bank Accounts Investments Business Interests Life Insurance Pension Benefits

Jointly-Held Property Community Property Beneficiary Designations Wills and Trusts Buy-Sell Agreements

CURRENT ESTATE PLAN

GOALS AND OBJECTIVES Income Needs at Death Cash Needs at Death Retirement Income Needs Capital Accumulation Needs Asset Protection Needs Educational Funding Charitable and Gift Giving

To Achieve Goals and Objectives

PLANNING ALTERNATIVES

To Minimize Costs and Taxes

PROPOSED ESTATE PLAN

VSA 2C1.15 ed. 09-12 Page 1 of 1

 VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

Costs to Settle an Estate Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

What Are the Potential Costs to Settle an Estate?

Regardless of the size of an estate, certain cash outlays to settle the estate are inevitable. The size of these outlays and the resulting estate shrinkage, however, usually vary with the size and complexity of the estate.

Estate settlement costs can arise from some or all of the following:

1.

Final Expenses: Final expenses can include medical, funeral and burial expenses, plus the payment of debts owed by the estate owner.

2.

Estate Administration Expenses: The costs to administer an estate may include bonding costs, attorney and/or executor fees, appraisal fees, brokerage or sales fees or commissions, court costs and any costs associated with maintaining or improving estate assets for sale.

3.

Taxes: Even estates that escape the federal estate tax may be subject to state death taxes.

Payment of these estate settlement costs can siphon off anywhere from 10% to as much as 60% of an estate's value, considerably reducing the inheritance ultimately received by the heirs.

A solution to the estate shrinkage dilemma is to use life insurance to create a source of funds to pay estate settlement costs, preserving the value of the estate for the heirs.

VSA 2C1.16 ed. 09-12 Page 1 of 1

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

An Estate Planning Quiz Presented by:

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How Much Do You Know About Estate Planning?

True

False

1. The unlimited marital deduction postpones the payment of federal estate taxes.

2. A married couple can give any individual up to $28,000 in gifts tax-free in 2017.

3. Federal estate taxes must be paid in cash, generally within nine months of death.

4. Federal estate tax rates are progressive, meaning that they increase with the size of the estate.

5. Your estate may have to pay state inheritance taxes.

6. If you die without a will, state intestacy laws will determine who inherits your property.

7. The federal estate tax is payable only if your taxable estate exceeds the unified credit equivalent, which is $5,490,000 in 2017.

8. The marital deduction does not apply to property you bequest to someone other than your spouse.

9. An estate can be taxed at a rate as high as 40%.

10. Various estate planning techniques and tools can be used to reduce estate settlement costs.

All of these statements are true. If you answered seven or more correctly, you have a good foundation of knowledge upon which to build your estate plan. Regardless of how many you answered correctly, the time to begin planning your estate is today, before it is too late to make important decisions about the accumulation, preservation and distribution of your assets.

VSA 2C1.17 ed. 01-17 Page 1 of 1

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

The Estate Planning Team Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

Depending on your situation and your estate planning goals, your estate planning team is composed of some or all of these professionals:

Attorney

An attorney, particularly one who specializes in estate planning, will be able to draft not only any needed legal documents, but will also be able to identify estate planning techniques that may save your estate thousands of dollars.

Accountant

Your accountant may be called upon to provide specialized knowledge of your personal and business finances, to determine a valuation of estate assets, and to prepare required income and estate tax returns after your death.

Insurance Agent

When life insurance is the solution to estate liquidity or other estate planning needs, an insurance agent can help you select the right policy and face amount, as well as recommend policy ownership arrangements that may result in substantial estate tax savings.

Securities Broker

A securities broker may be needed to assist you in achieving your estate accumulation, preservation and/or distribution objectives.

Trust Officer

You may want to designate a bank or trust company officer as executor of your will or as trustee of any trust(s).

Charitable Planner

If you plan on making charitable bequests, either during your lifetime or at your death, an expert in charitable planning arrangements can help structure a gifting program that benefits all parties.

YOU

The estate planning process revolves around you. Ultimately, you must select and implement those recommendations that you decide will most closely accomplish your estate planning goals.

VSA 2C1.18 ed. 09-12 Page 1 of 1

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

Plan Now or Pay Later Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

TheChoi cei sYours…

Pl an Now…or…PayLat er!

Spending a little time and money NOW in planning your estate can yield substantial benefits...

 You have the opportunity to arrange your estate in such a way as to minimize taxes and estate settlement costs, leaving more of your assets to your family.

 You are able to accomplish your goals and objectives for the disposition of your assets.

 Your family can continue to benefit from your knowledge and experience, even after you are gone.

The alternative is to let others -- the courts, attorneys -- do your estate planning after your death.

The end result of this choice is usually increased costs, delays and frustration for your family.

VSA 2C1.19 ed. 09-12 Page 1 of 1

 VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

How Property Is Owned Presented by:

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What Impact Does the Form of Property Ownership Have on Its Distribution at the Owner's Death?

Type of Ownership

Description

At the Owner's Death

Community Property

Any property acquired in a community property state by either spouse during marriage, other than by gift or inheritance.

Either spouse may dispose of his/her share of community property by will as he/she desires.

Separate Property

All property that is not community property and is held by one person alone.

Owner has an absolute right to dispose of separate property however he/she wishes during life or by will at death.

Non-community property held by two or more persons jointly, with equal rights to share in the property; can be terminated by either tenant.

At the death of a joint tenant, the surviving joint tenant receives the entire property outside of probate, regardless of the deceased joint tenant's will.

Available to spouses in some states; similar to joint tenancy except that a tenancy by the entirety cannot be terminated unless both tenants agree.

Same as joint tenancy with right of survivorship.

Tenancy in Common

Each tenant in common owns an undivided interest in the non-community property, not necessarily in equal shares. There is no right of survivorship.

At the death of a tenant in common, his/her interest is disposed of according to the terms of his/her will.

Life Estate and Remainder Interest

The owner of a life estate has the use of the property during his/her lifetime, with the remainder interest in the property going to another party (the remainder person) at the life tenant's death.

The life tenant has no interest in the property to transfer at death. Instead, the property passes to the remainder person.

Trust

While the trustee holds title and is the nominal owner of trust property, the trust beneficiary is the actual or equitable owner of the benefits arising from trust assets.

At the death of a trust beneficiary, equitable ownership of the trust passes according to the terms of the trust.

Joint Tenancy with Right of Survivorship

Tenancy by the Entirety

Since property ownership is governed by state statute, an attorney should be consulted on questions about property ownership arrangements and their impact on estate plans.

VSA 2C1.20 ed. 09-12 Page 1 of 1

ďƒ“ VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.

Joint Tenancy: Advantages and Disadvantages Presented by:

Geoff Thompson Synergistic Life and Estate Prepared for:

In a joint tenancy, two or more people hold equal interests in property. At the death of a joint tenant, his or her interest passes automatically to the other joint tenant, regardless of what the deceased joint tenant's will might provide. While joint tenancy is one of the most widely used forms of property ownership, it can create problems. Let's see why.

Joint Tenancy Advantages  Avoidance of probate: Title automatically passes to the surviving joint tenant without having to go through the probate process.

Joint Tenancy Disadvantages  Property cannot be transferred by will: Since title automatically passes to the surviving joint tenant, a will has no impact on joint tenancy property, even if you change your mind.

 Convenience: It is much more convenient to hold bank accounts in joint tenancy since either tenant can then withdraw funds.

 Joint tenancy can effectively disinherit certain heirs: Children of a deceased joint tenant can be unintentionally disinherited if a surviving spouse remarries and a joint tenancy is established with the new spouse. In the case of a childless couple, the surviving spouse's family may ultimately receive all of the joint tenancy property, effectively disinheriting one spouse's family. Joint tenancy with an adult child can result in other children receiving less than an equal share of the estate.

 Creditor protection: Some states protect joint tenancy property from the creditors of the deceased joint tenant.

 Gift tax consequences: Creation of a joint tenancy with someone other than a spouse can result in a gift tax, if the value of the assets exceeds the annual gift tax exclusion ($14,000 in 2017).

 Tax savings: In some states, joint tenancy between spouses can result in income and/or state death tax savings.

 Possible excessive estate taxation: When a married couple holds assets as joint tenants, excessive estate taxation can result at the surviving spouse's death, since joint tenancy property can diminish the estate tax savings of a credit trust arrangement.

 Privacy: Since probate records are generally open to the public, joint tenancy property will normally pass to the surviving joint tenant without publicity.

 Potential income tax consequences: Joint tenancy property receives a step-up in cost basis only on the deceased joint tenant's share of the property, which means that income tax may be payable on a portion of the appreciated value of the property if sold.

The decision of whether or not to hold property in joint tenancy is a complex one and should not be made without consulting an attorney.

VSA 2C1.21 ed. 01-17 Page 1 of 1

 VSA, LP The information, general principles and conclusions presented in this report are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care has been taken in the preparation of this report, VSA, L.P. is not engaged in providing legal, accounting, financial or other professional services. This report should not be used as a substitute for the professional advice of an attorney, accountant, or other qualified professional.