JK Lasser's New Rules for Estate and Tax Planning » (Revised)

STEWART H. WELCH III, AEP, CFP®, is a nationally recognized financial advisor who is widely quoted in the press, including Money magazine, Worth, and the Wall Street Journal. He has appeared on CNN, CNBC, and Fox News. Welch's company, The Welch Group, LLC, is a fee-only, wealth management and financial advisory firm serving wealthy families throughout the United States.

HAROLD APOLINSKY, Esq., EPLS, is a board-certified estate planning attorney with the law firm Sirote & Permutt, PC, in Birmingham, Alabama. He served for over twenty-five years as an adjunct professor of estate planning at both the Cumberland School of Law and The University of Alabama School of Law.

CRAIG M. STEPHENS, Esq., LLM, is a tax attorney specializing in estate planning and family business succession planning. He is former president and board member of the local chapter of the National Committee on Planned Giving. Stephens is cochairman of his firm's estate and trust planning practice group at Sirote & Permutt, PC, in Birmingham, Alabama.

A complete guide to planning an estate under today's tax rules

When it comes to planning an estate under today's ever-changing tax rules, you can't leave anything 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.

Now, in the fully 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. Packed with up-to-the-minute facts, this practical resource covers essential issues; including how new legislation will impact inheritances and trusts, the do's and don'ts of gifting, retirement planning, and much more. Filled with in-depth insights and expert advice, the J.K. Lasser's New Rules for Estate and Tax Planning also:

• Reflects the most recent changes in tax laws as applicable to estate taxation

• Offers useful planning with regard to trusts, charitable contributions, life insurance, and wills

• Outlines the best ways to preserve your wealth through proper planning strategies

Written in a straightforward and accessible style, this timely guide will show you how to efficiently arrange your estate today so that you can leave more to those you care about tomorrow.

Acknowledgments ix

Introduction xiii

1 Congress Plays 'The Guessing Game' with the Estate Tax Laws 1

Cautionary Note 1

Retirement Savings and Pension Reform 2

Marginal Tax Rates 4

Education Funding Incentives 6

Business and Corporate Tax Relief 11

Estate, Gift, and Generation-Skipping Transfers 11

2 Estate Planning: You Need It-Here's Why 17

What Is Estate Planning? 17

The Benefits of Estate Planning 17

The Nightmares of Poor Planning 19

The Myths of Estate Planning 20

Guidelines for Successful Estate Planning 22

3 The Estate Tax System: How Much Are You Really Worth? 25

Determining Your Estate Net Worth 25

Understanding the Estate Tax System 25

Your Estate Tax Picture 31

Your Future Estate 34

Overview of Estate Planning Strategies 34

4 Investment Strategies for Maximizing Estate Growth 37

Growth Strategy with a Safety Net® 38

Prioritizing Your Investment Dollars 43

Retirement Planning: Choosing the Best Investment Environments 43

Some Final Thoughts on Investing 51

5 Retire with Dignity: How Much Is Enough? 53

Your Retirement Requirements 53

6 You Don't Have a Will? Big Trouble! 67

Property Transfers at Death 68

Transfers via Probate 68

Direct Transfers by Title 71

Other Methods of Property Ownership 75

Choosing the Best Methods of Ownership 76

Setting Estate Planning Goals 77

7 Where There's a Will, There's Your Way! 79

What Is a Will? 79

Types of Wills 79

Advantages and Disadvantages of Wills 81

Intelligent Decisions Concerning Your Will's Basic Provisions 83

Executing Your Will 93

Where to Store Your Will 93

Other Important Documents 94

Working with Your Attorney 97

When toReview Your Estate Plan 102

8 Using Trusts in Your Estate Plan 105

The Credit Shelter Trust Will 106

Disclaimers 110

Marital Trusts 111

Spendthrift Trust 115

Standby Trust 116

Other Trusts 116

9 Understanding the Living Trust 117

Advantages of Living Trusts 117

Disadvantages of Living Trusts 119

How a Living Trust Operates 120

Transferring Property into Your Living Trust 122

Types of Property Likely to Be Transferred 125

Living Trust Myths 127

Transacting Business with Your Trust 129

10 Using Insurance in Your Estate Plan 131

Life Insurance 131

Using Life Insurance to Replace Income 133

How Much Life Insurance Do You Need? 134

What Type of Life Insurance Is Best for You? 137

Insurance on a Homemaker 137

Insurance on Adult Children 137

How to Get the Best Deal on Term Life Insurance 138

Insurance Warnings! 138

Using Life Insurance for Estate Liquidity 139

How Much Is Enough? 140

What Type of Life Insurance Is Best for Estate Liquidity? 140

The Irrevocable Life Insurance Trust 142

Getting Your Life Insurance into Your Trust 143

Using Life Insurance to Leverage Your Estate 145

About Your Cash Values 147

Long-Term Care Insurance 149

11 Smart Strategies for Gifting Assets to Family Members 153

The Annual Gift Tax Exclusion 153

Unintended Gifts 154

Filing a Gift Tax Return 155

The Lifetime Applicable Exclusion Amount 156

Outright Gifts 156

When the Donee Is a Minor 158

Other Tax-Free Gifts 161

Family Gifts Utilizing Trusts 161

Grantor Retained Annuity Trust 162

Grantor Retained Unitrust 163

Qualified Personal Residence Trust 163

Taking Advantage of Generation Skipping Transfers 168

Sales to Family Members 170

Loans to Family Members 173

12 Strategic Planning with Charities 175

Outright Gifts to Charities 176

Testamentary Gifts to.Charities 178

Gifts Using Charitable Trusts 178

Using Your Charitable Trust for Retirement Planning 181

The Private Foundation 184

13 Family Limited Partnerships 189

General Structure of the Family Limited Partnership 189

Family Limited Partnership Rules 194

14 Succession Planning for the Family Business or Farm 201

Special Estate Tax Benefits for Farmers and Closely Held Business Owners 203

Valuing Your Business or Farm 204

Succession or Sale? 205

Succession Planning: Keeping the Family Business in the Family 205

Maximizing Your Business's Value through a Sale 206

Structuring Your Buy-Sell Agreement 207

Types of Buy-Sell Agreements 208

Funding the Buy-Sell Agreement 209

One Final Strategy-the Employee Stock Ownership Plan 210

15 Asset Protection Strategies 213

The Concept of Fraudulent Transfers 214

A Word about Jointly Held Property 217

Retirement Plans 217

Life Insurance 219

Using Trusts to Protect Assets 219

Using Limited Liability Entities to Protect Assets 221

Use of Multiple Limited Liability Entities 223

Foreign Asset Protection Trusts 224

Domestic Asset Protection Trusts 226

Epilogue-Dealing with Parents and Their Money 229

Appendix A Professional Advisors 231

Appendix B Estate Planning Terms 235

Index 241