ESTATE PLANNING Agency Name Presenters Name Agency Phone

ESTATE PLANNING Agency Name Presenter’s Name Agency Phone number Contact email ALR 828 PPT-2 4/20 Agency Street Address City, State, Zip Code

Introduction to Estate Planning • What is estate planning? • Why should you be interested in estate planning? • How much money should you have before you consider estate planning?

Estate Planning Goals – While Living • Provide for management of assets in the event of disability or incapacity • Provide instructions for healthcare decisions • Protect assets from long term care costs

Estate Planning Goals – At Death • Determine who gets what, how and when after death • Maximize estate by reducing expenses and avoid delays • Minimize estate taxes • Provide liquidity

Who Should Plan? EVERYBODY! Why? • Children • Assets (farm, business, etc. ) • Incapacity • Healthcare • Elder Care • Expenses/Taxes

Planning All of Us Should Consider Long term care planning • Provides a greater level of independence and dignity when long term care is needed • Affords assistance to maintain an accustomed standard of living • Promotes estate preservation

Planning All of Us Should Consider Financial • Financial Durable Power of Attorney Health Care Decisions • Power of Attorney for Healthcare • Living Will

Planning All of Us Should Consider Will • Legal Document – Takes effect at death – State requirements vary • Benefits – Transfer of assets – Names guardians – Can establish trusts for beneficiaries

Distributing Your Assets Probate • Court-supervised distribution of assets • Advantages – Distributes assets according to will – Limits time to challenge will – Limits time creditors can make claims

Distributing Your Assets Probate • Disadvantages – Time – Cost* – Publicity * How much does probate cost? ; www. thebalance. com/estate planning; November. 2018

Distributing Your Assets That Pass Outside of Probate • Joint tenancy with right of survivorship • Assets subject to a beneficiary designation • Assets owned by a Living Trust

Distributing Your Assets Trusts • Parties to a Trust – Grantor – Creates Trust – Trustee – Manages Trust – Beneficiary – Benefits from Trust • Types of Trusts – Living vs. Testamentary – Revocable vs. Irrevocable

Distributing Your Assets Living Trusts • Preferred primary estate planning document • Avoid probate – Time – Costs – Publicity • Financial guardianship – Provide protection and management of trust assets if the grantor becomes incompetent

Estate Taxes and Your Estate… • All Tangible Assets • All Intangible Assets • At Fair Market Value!

Your Estate at Death Life Insurance Real Estate Personal Property Business Interests • • Final Expenses Accounting Fees Appraiser’s Fees Debts to the Decedent Probate Fees Attorney Fees Executor’s Commission

Estate Taxes 2020 • $11, 580, 000 estate tax exclusion (indexed for inflation) • 40% estate tax rate • Portability of estate tax exclusion • Sunsets 12 -31 -2025 (2017 Tax Cuts & Jobs Act) State estate taxes

Deductions/Credits • Unified credit equivalent ($11, 580, 000 in 2020) • Lifetime gift tax exemption of $11, 580, 000 (2020) • Unlimited marital deduction • Unlimited charitable deduction • Annual gift tax exclusion ($15, 000 in 2020)

Tax Payment Alternatives • Cash – Liquidity? – Sell business/farm/property? • Borrow – Interest? • Use life insurance proceeds

Planning Some of Us Should Consider Irrevocable Life Insurance Trust Transfers Grantor creates Trust Gifts to Pay Premium* Third Party Trustee Manages Trust Beneficiaries benefit from Trust *Gifts may qualify for annual gift tax exclusion

Charitable Remainder Trusts • Charitable Remainder Trusts (CRTs) are irrevocable trusts that provide: – An “income” stream during the lifetime of named beneficiaries – Remaining property passes to charity at the death of beneficiaries – Income stream can be a set annuity payment (charitable remainder annuity trust – CRAT) or stated as a percentage of the value of the trust each year (charitable remainder unitrust – CRUT)

Charitable Remainder Trusts • Minimum value of income stream is 5% of the value of property transferred to trust • Trust can be set up for lifetime of beneficiary or beneficiaries or for a term of years • Term of years is limited to 20 years • Estate tax deduction limited to estimate of value of property passing to charity, not for value of property contributed to trust

Charitable Remainder Trusts – Example • John’s taxable estate is $6. 0 million. John wants to provide an income stream for Mary during her lifetime. John’s trust sets up a CRUT for Mary with $1, 500, 000 and provides that Mary is to receive 7% of the value of the trust each year. At the time of John’s death in May, 2020, Mary is 76 years old. • The charitable deduction is $775, 935 based on IRS interest rate of 3. 20% (May, 2020)

Charitable Remainder Trusts – Example • For federal estate tax purposes, John’s estate is now $5, 224, 035 ($6, 000 - $774, 360). • He has provided for Mary and reduced his estate below the estate tax exemption so there are no federal estate taxes to pay. • He has also provided for his favorite charity (or charities) at Mary’s death.

What Next? • Start with baby steps and review your assets and the titling of the assets • Consult with an experienced estate attorney and tax professional to discuss your individual needs and circumstances • Use all available resources to help • Your financial professional is invaluable in this process • Don’t put off until tomorrow what you should do today

Conclusion: Thank you for coming. Please note that the offering insurance company or its agents and representatives cannot give legal or tax advice. The brief discussion of taxes on this page may not be complete or current. The laws and regulations are complex and subject to change. For complete details consult your attorney or tax advisor. This information is provided for general consumer educational purposes and is not intended to provide legal, tax or investment advice. All guarantees are based on the claims-paying ability of the issuing insurance company. Securities offered by Personal Financial Representatives through Allstate Financial Services, LLC (LSA Securities in LA and PA). Registered Broker-Dealer. Member FINRA, SIPC. Main O�ce: 2920 South 84 th Street, Lincoln, NE 68506. (877) 232 -2142. Check the background of this firm on FINRA’s Broker. Check website http: //brokercheck. finra. org. Life insurance offered through Allstate Life Ins. Co. & Allstate Assurance Co. , 3075 Sanders Rd, Northbrook IL 60062; American Heritage Life Ins. Co. , 1776 American Heritage Life Dr. , Jacksonville FL 32224. In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge NY. ALR 828 PPT-2 4/20