Estate Planning Presentation - Benefits Caterpillar

Estate PlanningA Sensible Approach

Today’s Agenda is SimpleWhat does estate planning mean to you?“Permanent” estate tax lawToday’s estate tax landscapeHow you can avoid the 10 common mistakes peoplemake with their estatesAny discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax oraccounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.Estate Planning2

What Does Estate PlanningMean to You?Estate Planning3

What is Estate Planning?Estate Planning means different things to different peopleDetermining who will care for your childrenStructuring your finances so your loved ones are taken care ofStrategizing the best way to minimize costs of dyingEstablishing who will handle your financesDeciding who will make medical decisions on your behalfDetermining if your beneficiaries can handle an inheritanceEstate Planning4

Almost Everyone Needs SomeEstate PlanningParents with young children or financiallyirresponsible childrenSpouses with children from former marriagesGrandparents who want to benefit andprotect grandchildrenBusiness owners who want to pass on theirbusiness to childrenIndividuals who have dependentswith special needsEstate Planning5

Permanent Estate Tax Law?“Permanent” in Washingtonreally means “Current”Estate Planning6

The Estate Tax LandscapeFederal Estate TaxesIRSYearTop Tax Rate2011-201235%2013 and beyond40%In 2018, the federal estate tax exemption is generally 11,180,000 forindividuals and 22,360,000 for married couplesForbes.com 1/2017*Internal Revenue Service, Rev. Proc. 2018-18Estate Planning7

Where Not to DieDoes your State have an Estate or Inheritance Tax?State has an estate taxWAMEMNORNYNEPAIAILKYState has an inheritance taxState has an estate andinheritance taxVTNJMAMDRIDCCTHISource: Wolters Kluwer Tax & Accounting, 1/2018Estate Planning8

#1 – Make a PlanEstate planning is about making sure yourwishes are carried outYou want to avoid assets passing to the wrongheir at the wrong time and in the wrong wayWorking with a team that includes a financialadvisor, tax professional and estate planningattorney can help put you on courseEstate Planning9

#2 – Document Your WishesThere are five documents that everyone should have to retaincontrol over their wishes and decisions:Health CarePower ofAttorneyor ProxyWillEstate PlanningDurableFinancial Powerof AttorneyLiving WillHealth InsurancePortability andAccountabilityAct (HIPAA)Release form10

#2 – Document Your WishesWhere there’s no will, there’s no sayA willShould clearly spell out what you want to have happento your assets and possessions at your deathNames your personal representative (executor)and guardian for minor childrenWithout a will, the state may decide whereyour things are going to goEstate Planning11

#2 – Document Your WishesSurviving family members often fight over “things” not moneyTalk to your children, friends, andrelatives about “nontitled” property(jewelry, furniture, artwork)Estate PlanningIf state law allows,consider including reference to atangible personal propertymemorandum within your will12

#2 – Document Your WishesWhat is an Executor or Personal Representative?The person who carries out your Willhelps get through the Probate processSubmits paperwork tobegin proceedingsTakes inventory of assets andmanages them during processNotifiescreditorsEstate PlanningPays debts,expenses, taxesDistributes propertyper instructions in WillSubmits paperworkto end proceedings13

#2 – Document Your WishesA Health Care Power of Attorney or ProxyAssigns the person who will makehealth decisions for you if you are unableA Durable Financial Power of AttorneyAssigns the person who will makefinancial decisions if you are unable Estate Planning14

#2 – Document Your WishesA Living WillHIPAA Release FormProvides clear instructionsas to what treatmentyou do and do not wantif you are unable tospeak for yourselfAllows named individualsto have access tohealthcare informationEstate Planning15

#2 – Document Your WishesConsider having these documents created if you do not alreadyhave themLiving WillWillHealth Care Powerof Attorney or ProxyHIPAARelease FormDurable FinancialPower of AttorneyMake sure a family member or someone else you trust knowwhere these documents are keptEstate Planning16

#2 – Document Your WishesRevisit your documents to ensure they are up-to-date and continueto reflect your wishesHeath Ledger – when the actor died in 2008, it wasrevealed that the “Dark Knight” star had failed to redothe will he had signed before his daughter was born.This left his entire estate to his parents and sisters.5 years later the family announced all the moneywould go to Matilda, Ledger’s daughterEstate Planning17

#3 – Set up Guardianship for DependentsIf you don’t name a guardian for minor children or adependent with special needs, a judge will appoint oneTalk to the prospective guardian ahead of timeThe guardian does not have to be the same personwho manages the moneyEstate Planning18

#4 – Consider TrustsTrusts can give you additional controlWho gets whatis in the trustWhat goes intothe trustEstate PlanningHow and whenit is distributed19

#4 – Consider TrustsBenefits of a trustBeneficiaries may gain quicker access to assetsLess estate taxes may be due upon death because trust assets maynot be considered part of the taxable estateRetain complete control even with complicated situations such aschildren from more than one marriageProtect your legacy from heir’s creditors or those who may not be ableto manage moneyAssets pass outside of probate (which may result in lower courtfees/taxes) and remain privateEstate Planning20

#4 – Consider TrustsWhat are the basics?Grantor Sets up the trustBeneficiary Recipient of trustbenefitsTrustee Similar toExecutor/PersonalRepresentative,but for a trust Executes theGrantor’s instructionsfound in terms ofthe trustEstate Planning21

#4 – Consider TrustsEstate Planning22

#4 – Consider TrustsWhat are the basics?State laws varysignificantly and needto be consideredEstate PlanningChoosing andcreating a trust isa complex processThe guidance of anattorney with estateplanning expertise isrecommended23

#5 – Plan for Federal and State Estate Taxes Federal Estate Taxes aredue within 9 months ofdeath – in CASHEstate PlanningThere are strategies youcan take to reduce theamount of your estate tolower your tax burden24

#6 – Avoid ProbateWhat is probate?Probate is the legalprocess of verifying yourwill through the courtsEstate PlanningProbate can be slow, costlyand it isn’t private – it is amatter of public record25

#7 – Prepare for Long Term CareLong term care is costlyand quickly uses up assetsoriginally earmarkedfor your heirsEstate Planning26

#8 – Know About Income in Respectof a Decedent or IRDWhat is Income in Respect of a Decedent (IRD)?If you didn’t pay income tax onaccrued income during your life,your beneficiaries will haveto pay the income tax whenthey get the moneyEstate Planning27

#8 – Know About Income in Respectof a Decedent or IRDHow can Income in Respect of a Decedent (IRD) affect your plans?Jenny’s estate 100,000 personal savings 200,000 401(k)Jenny passes away in 2017 anddid not pay income taxes on anyof the money in her 401(k)Estate PlanningHer beneficiates will be taxedon the FULL 200,000 asordinary income28

#9 – Keep Your Beneficiaries Up to DateWhen does a will not have the final word?InsurancePolicyInsurancePolicy401(k)401(k), IRA, Insurance Policiesand other assets with named beneficiarieswill pass based on your beneficiarydesignation onlyEstate Planning29

#9 – Keep Your Beneficiaries Up to DateMake a list of your assets withname beneficiariesReview them at least every five years orwhenever there is a major change in yourlife (birth, death, marriage, divorce)Update as neededEstate Planning30

#10 – Don’t Forget About Digital AssetsAsk yourselfCould you quickly and easily find ALL the valuable documents and files storedonline in the cloud or on your computer(s), smartphone, tablet, backup CDs,flash drives, etc.?What about your accounts with Ebay, PayPal, iTunesLoyalty programsOnline Storage(photos and documents)Estate PlanningFacebook, Twitter,YouTube, Google DocsBanks andInvestment firms31

#10 – Don’t Forget About Digital AssetsMaking arrangements for digital assets may be more difficult thanthose in the physical worldWork with an attorney to designate a“digital fiduciary” who would be givethe right to access digital informationand define where they would be foundHave a plan to shut down“online” presenceEstate Planning32

How to Avoid the 10 Common Mistakes?1Make a plan6Avoid probate2Document your wishes7Prepare forLong Term Care3Nominate guardiansfor dependents8Know about Income inRespect of a Decedent (IRD)4Consider trusts9Keep your beneficiariesup to date5Plan for Federal andState estate taxesEstate Planning10Don’t ignore digital assets33

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QuestionsEstate Planning35

Important InformationMetropolitan Life Insurance Company, New York, NY 10166Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation,and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax andaccounting advisors as appropriate.MetLife administers the PlanSmart program, but has arranged for Massachusetts Mutual Life Insurance Company(MassMutual) to have specially-trained financial professionals offer financial education and, upon request, provide personalguidance to employees and former employees of companies providing PlanSmart through MetLife.Securities and investment advisory services are offered through qualified registered representatives of MML Investor Services,LLC, Member SIPC. MML Investors Services, LLC is not affiliated with MetLife, or its affiliated companies.L0318504013[exp0120][All States][DC,PR]Estate Planning36

Estate Planning . 7. The Estate Tax Landscape . Federal Estate Taxes . Year . IRS . Top Tax Rate . 2011-2012 . 2013 and beyond . 35% . 40% . In 2018, the federal estate tax exemption is generally 11,180,000 for individuals and 22,360,000 for married couples . Forbes.com 1/2017 *Internal Revenue Service, Rev. Proc. 2018-18