Wills, Trusts, APT’s & Stuff
“Who me, worry?”
By Rick Kahler, MS, CFP™
Kahler Financial Group
Another Estate Planning Seminar
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How ‘bout them Bears?
What’s happened to the Vikings?
Is the stock market near a high?
When will the real estate bubble burst?
Will it be Hillary or Rudy in 2008?
Let’s Talk About Anything…
…except about death.
“OK, Kahler...I’ll Get Around To
It…”
…he never did
Why Do So Many Not Have Wills?
• Four people I interviewed in four months
– All had net worth’s of $1 million to $4 million
– Most had a spouse and children
None had a will
Why Don’t We Plan For Death?
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Too much pain around death
Money scripts…..
I don’t have enough to be worried about
I’ll let those living figure it out
Planning is too complicated or expensive
“OK, I’ll Plan.”
Planning
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Will
Living Trust
Executor/Trustee
Guardianship
Durable Power
Distribution to Heirs
Living Will
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Taxes/Liability
A/B Trusts
ILIT
Self-Settled Trust
FLP
LLC
Corp
Land Trusts
Understand the Terminology
• Decedent – the guy who died
• Executor – the person in charge of
‘executing’ the instructions of the will
• Trustee – the person in charge of carrying
out the instructions of a trust
• Grantor, Settlor, Creator – the person who
establishes a trust
Understand the Terminology
• Testamentary Trust – a trust created by a will at
death
• Probate – a public proceeding before a judge that
governs the distribution of an estate passed by a
will
• Joint Tenancy – an interest in property where title
automatically passes to the other owners
• Tenants in common – an interest in property where
title is passed only by a will
“OK, OK…What Should I Do?
Get started, today.
Everyone Needs A Will
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Guardianship
Executor/Trustee
Durable Power
Distribution to Heirs
Even If You Use A Living Trust
Who Needs A Living Trust?
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To Avoid Probate
Your Final Distribution To Remains Private
Faster Disposition Of Assets
Don’t Mind Retitling All You Own
Own real estate, a large estate, business
Living Trust
• NO liability protection
• Some Privacy
– Don’t use your name in the title or be trustee
– Beneficiary deemed to own equitable title
• NO additional tax return
• NO annual fees or paperwork
• Tax Neutral
Do I Need To Worry About
Taxes?
• Will there be a chance your estate will be
over $2,000,000 when you die?
• Don’t forget
– Inheritances
– life insurance policies
A Simple Strategy
• Create a ‘Family Trust’ aka ‘credit shelter
trust’ or the ‘A’ trust
• The first $2 million goes to this trust
• Spouse (usually) gets only the income
• Balance goes to kids/charity and is not
taxed in the estate of the spouse
• Cannot be changed after death
A Simple Strategy
• Create a ‘Marital Trust’ aka ‘Q-Tip trust’ or
the ‘B’ trust
• The balance of the estate goes to this trust
• Spouse gets whatever he/she wants
• Balance goes to whoever he/she wants
• Can be changed after death
Irrevocable Life Insurance Trust
• Avoids creditors
• Possible every insurance policy should be
owned by a trust
• Is never taxed
• Spouse could receive income for life
• Can buy illiquid assets from the estate
• Passes to children or charity outside of
spouses estate
Self-Settled Trust
• Asset Protection
• Best used in conjunction with a irrevocabel trust
• Statutorily allowed in five states
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Nevada
Missouri
Delaware
Alaska
SOUTH DAKOTA
SD Asset Protection Trust
• Four year look back on fraudulent transfer
• Ten year look back on bankruptcy
• Grantor can retain power to:
– Replace trustee
– Veto distributions
– Change beneficiaries
• Must have a SD trustee
Family Limited Partnership (FLP)
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Liability protection for limited partners
No liability protection for general partners
General partner usually a corporation
Additional tax return
Annual fees but no meeting
Tax neutral
Family Limited Partnership (FLP)
• General Partner is corporation
– Receives a 1 to 10% interest
– Shares of corp owned by parents
• Limited Partners get 45 to 49% each
– Typically owned by parents
• Limited shares are gifted to kids by parents
• General Partner controls FLP
• Upon death, shares are valued at market which is
typically 25 to 75% under asset value
Family Limited Liability
Company (FLLC)
• Liability protection for all
• Some privacy
– Officers are public record
• Additional tax return
• Annual fees but no meeting
• Tax neutral
Family Limited Liability
Company (FLLC)
• Only one entity needed
• Members get 50% each
– Typically owned by M & D
• Membership units are gifted by M & D
• Managers control – voting and non-voting units
• Upon death, units are valued at market which is
typically 25 to 75% under asset value
In Summary
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Form a FLP or FLLC
Put all your assets into the FLP/FLLC
You hold the voting shares
Contribute the units of the FLP/FLLC to
your living trust or APT
• Created an entry level asset protection
strategy with optimal estate tax protection
Asset Protection Fundamentals
• Own nothing in your own name
• Use a variety of entities
–Trusts, LLCs, Corps, FLPs
• In a variety of states
Assets
Registered Agent
Wyoming Resident
FLLC
Wyoming
Trustee
Alaska Resident
Alaska
Asset Protection Trust
Trustee
You
LIVING TRUST
South Dakota
Beneficiary
This Is Just The Beginning
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Don’t try this at home
The devil is in the details
Educate yourself
Use an attorney
Use an accountant
Our 30 Years of Experience Runs
Deep
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Operate multiple businesses
With over 40 employees
Instruct nationally and internationally
Columnist for 10 years
Several financial and real estate degrees
– CFP™, ChFC, CCIM, GAA
– Masters in Wealth Management
Our Broad Experience Means:
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We give you tried applications, not theory
You learn from our experiences
We see the bigger picture
We know the answers to the questions you
don’t ask
• You get better, more balanced advice.