Estate planning matrix.
However, estate planning has also come to involve planning for the accumulation and distribution of an estate during lifetime as well as at death. It must also be recognized that comprehensive estate planning will often involve the concepts and techniques contained in the business planning and employee benefits chapters of this guide. For example, although additional estate liquidity would be provided from the sale of a business interest, estate taxes will be increased through inclusion of the proceeds of the sale in the taxable estate. Likewise, an effective estate plan should maximize employee benefits, while at the same time taking into consideration their impact upon the estate.
The following matrix should provide a better understanding of how the concepts and techniques, represented in the charts, can be used to solve estate planning problems.
PROBLEM SOLUTION(S) PAGE Loss of Estate Value EXEMPTION TRUST WILL provides the 28 Through Estate Tax opportunity to reduce estate taxes (the COMPARISON OF WILLS chart on page 33 illustrates the substantial savings). QTIP TRUST provides opportunity to 40 reduce taxes while controlling disposition of estate. GIFTS & SPLIT-GIFTS remove property from 54 the estate. GIVING--THE TAX ADVANTAGES 58 demonstrates the benefits of using the unified credit to make larger gifts and contrasts the gift of life insurance with gifts of other property. LIFE INSURANCE AS PROPERTY shows 82 how life insurance can be excluded from the gross estate for federal tax purposes. LIFE INSURANCE TRUST can remove life 62 insurance death proceeds from the estate. CHARITABLE REMAINDER TRUST can 66 remove from estate taxable property that can be replaced by life insurance in a Wealth Replacement Trust. GRANTOR RETAINED ANNUITY TRUST 70 allows a grantor to retain an annuity interest while at the same time reducing estate taxes. GENERATION-SKIPPING TRANSFERS 44 shows use of exemption in 2009 to transfer $3,500,000 to grandchildren. Estimating the FEDERAL ESTATE TAX explains the 18 Estate Tax calculations. Payment of Estate LIFE INSURANCE PRODUCTS can be used 86 Costs to provide funds to pay these costs. Chart compares alternative plans and explains their basic characteristics and essential differences. Distribution of SIMPLE WILL can provide for the 26 Estate distribution of estate assets, including specific bequests. EXEMPTION TRUST WILL offers added tax 28 savings and the post death management of assets. REVOCABLE LIVING TRUST (RLT) is a will 34 substitute offering many advantages during lifetime and at death. POUR-OVER WILL functions as a "fail 38 safe" device to transfer property at death into the RLT. Replacement of Income: Upon Death LIFE INSURANCE PRODUCTS can provide 86 funds to replace lost income in case of death (one approach to determining the necessary funds is contained in the discussion of HUMAN LIFE VALUE on page 14). Upon Disability DIABILITY--THE LIVING DEATH 254 demonstrates the need for proper planning before disability occurs. Upon Retirement DEFERRED ANNUITY can be used to 298 accumulate funds on a tax-favored funds. Insufficient Income LONG-TERM CARE planning provides an 270 or Assets for understanding of the risk and cost of Custodial Care In long-term care and how the risk can be Retirement managed. Management of Assets LIFE INSURANCE TRUST provides for 62 and Orderly Payment both asset management and ongoing of Income to Spouse payments. and Children EXEMPTION TRUST WILL with provisions 28 for both asset management and payment of continuing income to beneficiaries. REVOCABLE LIVING TRUST can provide for 34 management of assets both before and after death. Guardianship of SIMPLE WILL with provisions for 26 Children appointment of guardian (EXEMPTION TRUST WILL can also contain these same provisions).