What is Estate Planning?

Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women

What is Estate Planning?

The overall process of making decisions as to how property is to pass to others, during

one’s lifetime, at death, or after death.


Who Should do Estate Planning?

• Everyone…….It is not just about money

• Unless you are happy with the plan your state has provided


We are not giving Legal Advice

• Just Providing Non Bias Educational Information

• Seek out your own legal council


Coordinate Your Planning

Retirement Estate Transfer Income Tax Planning Planning Planning Planning


Who is the Estate Plan for?• Is it to pass a business to the next generation?• Is it to plan for retirement?• Is it to jump start the kids ambitions?• Is it to avoid taxes?


What are your most important goals?

• Individual• Family• Retirement• Business• Spiritual• Other


Key is to Articulate Goals

• The parents together• The parents individually• The on-farm heirs• The off-farm heirs

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Develop Goals under various circumstances

• What to do if spouse diesReceive Income?Sell interest?Participate in management?

• What to do if both die

• What to do if entire family dies


Common Estate Planning Goals• Minimize taxes at death• Minimize probate costs and delays• Conserve property during life and after death in

accordance with estate planning goals• Provide financial security

– Parents in retirement– Family member with a disability

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Key Areas of Concern• Guardian for minor children or adult children with special needs.• Providing income for a surviving spouse or children.• Management of estate property, assets and investments.• Minimization of probate and settlement expenses.• Minimization of estate and inheritance taxes.• Flexibility.• Liquidity for necessary and unavoidable expenses.• Gift planning.• Continuation and/or transfer of the business.


Putting together a team of Advisors• Accountant• Banker• Insurance agent• Investment advisor• Lawyer• Others

Take referrals, put through interviews


Who should be involved?– PARENTS– ASSET OWNERS– IF YOU OWN A BUSINESS - BUSINESS PARTNERS– HEIRS WORKING IN THE BUSINESS– HEIRS NOT WORKING IN THE BUSINESS– NON FAMILY BUSINESS PARTNERS– DAUGHTERS-IN-LAW & SONS-IN-LAW– ATTORNEY KNOWLEDGEABLE IN ESTATE PLANNING– FINANCIAL ADVISORS– INSURANCE ADVISORS– MANAGEMENT CONSULTANTS– LENDERS– MEDIATOR


Scheduling a Family Meeting• SCHEDULING THE MEETING • How often meetings will be scheduled• Set specific beginning and ending times• Establish a standing agenda• How are items added to the agenda• How are emergency meetings scheduled• How is notice of meetings given• What constitutes a quorum• What happens if someone cannot attend


A Process of Decision Making• What criteria will be used;

Financial, values, production, time, family, etc.

• Who will make the decision; Owner/Parents, children, employees, advisors.

• How will decisions be made; Autocratic, democratic, consensus, collaboration.

• How will conflicts be resolved.


MEETING GROUND RULES• Agree upon the role and authority of the facilitator.• Critique the message, not the messenger.• Everyone must listen to learn.• Do not interrupt. Practice good manners and model good behavior. • Discuss your emotions. Our emotions often drive our decisions. • Expect honest comments from others by being honest in your

comments.• Enthusiastically support decisions made at the meetings. • Trust the process to generate an estate plan that all will agree upon.


Important Considerations• TIMING- Choose the right time for making the decision.

Delaying a decision may be the same as not making a decision, however do not be rushed into making a decision.

• INFORMATION- Remember that there is never the right amount of information for making a decision. One always wishes that more information were available or one feels overwhelmed by the amount of information available.


Getting Started • Determine what you own and how much it is

worth.

• Who do you want to receive your bounty?

• Review any past estate planning


Vocabulary Activity

Take 10 minutes to complete vocabulary activity


Estate Planning Steps

– Examination of how property is owned or held– Review of family insurance program– Advisability of lifetime gifting– Alternatives for disposing of property during life


Property

• Real

• Personal

Classifying what you own


Fair market value of real estate• You may be pleased!• May be one of your greatest stores of wealth


Ownershipa). Fee simple, life estate, life tenants, leaseholds, remainder interestb). Tenants in commonc). Joint tenants with right of survivorship (car, bank account, simplified estate settlement)

Note: different states may have different forms of ownership


Forms of Co-ownershipTenancy in common– Each tenant holds an undivided interest in the

property – Upon a tenant’s death, the interest passes in

accordance with the tenant’s will (or state law if no will)

– The decedent’s estate includes only the decedent’s interest

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Forms of Co-ownershipJoint tenancy– Passes by survivorship designation– Precludes use of life estate/remainder

arrangement as to non-marital portion of the estate

– Magic words of conveyance– Takes precedence over the will

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Forms of Co-ownershipTenancy by the entirety (Ex: not allowed in Iowa)– Husband and wife can together convey a fee

simple but neither can unilaterally sever the tenancy

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Estate Planning Implications of Property Ownership Forms

• Non-spousal joint tenancies– Property is taxed in the estate of the first to die

except to the extent the surviving owner proves contribution for its acquisition

– “Consideration furnished” rule– Property included in decedent’s estate receives

a new basis at death

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Estate Planning Implications of Property Ownership Forms

• Spousal joint tenancies– The property is treated at the first death as

belonging 50% to each spouse for federal estate tax purposes• “Fractional share” rule

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Important Considerations• Type of Asset– Inventory– Depreciable

• Machinery & Equipment• Permanent Improvements

– Real Estate• Land• Personal Residence

• Tax Basis


Financial Statement(Net Worth Statement)

(Balance Sheet)

Now that you have inventoried all of your assets, you might just as well make a financial statement. It gives you your financial position as of a certain date.


John and MaryAssets:

House $50,0001993 Lumina $1500Personal property $10,000CD’s $20,000

Total assets $81,500

Liabilities:None

Assets $81,500Debts 0

Net worth $81,500


Financial StatementMight want to get more detailed:• Assets

Short, Intermediate, Longor

Short term, long term• Same with liabilities

Date post:	25-Feb-2016
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What is Estate Planning?

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