We're live
in the smoke
alright
doesn't this look good?
Here's a flaming start to your saturday
and it is flaming hot!
It's going to be over 90 degrees
today in Newport Beach
so
and hotter elsewhere where some of you are
anyway
Hello and thank you for joining us today for
this special livestream Labor Day BBQ Edition
of Q&A with C&T Session #3. My name is Tamara
Kirkland and together with my husband and
business partner Chris Browning, we are grilling
some tri tip here at one of the BBQ grills
in the community where we live for the next
30 minutes while we answer some general estate
planning questions and discuss a few fundamental
principles that can help you manage your personal
and financial affairs during your lifetime
and distribute your wealth after death.
I’ve put some marinated tri tip on the grill
and we have a Labor Day BBQ picnic for 2 prepared
here to eat for lunch today, complete with
a fresh green salad [pause], fresh berries
[pause], potato salad [pause] and apple pie
[pause]! Did you bring your favorite grilling
food to BBQ along with us? If so, this may
be the next best thing to meeting in person
for this very special Labor Day picnic! I
will be browning the tri tip for 5 minutes
on each side at high heat, then turning the
heat to medium and grilling for about another
20 minutes to cook it medium rare to medium
doneness, or to approximately 150-160 degrees
measured by the meat thermometer. I hope you’ve
grabbed your grilling food and tools and fired
up your grill. Are you ready? Let’s get
started!
Ever wonder: What exactly is my estate? Do
I even need estate planning? Well, according
to Investopedia.com, an estate is defined
as everything comprising the net worth of
an individual, including all land and real
estate, possessions, financial securities,
cash, and other assets that the individual
owns or has a controlling interest in. So
essentially, everything you have is your estate
and if you want to decide for yourself where
it goes, you may want to consider some form
of estate plan if you do not have one already,
or revisit your estate plan if you do have
one in place. And why would you do this?
Ask yourself “do I have a good plan in place
to preserve the assets I’ve spent a lifetime
building?” Estate planning is about protecting
your husband, wife, partner, children, or
other heirs and ensuring that your assets
are distributed how and when you want them
to be. And, estate planning also includes
managing the amount of estate taxes that may
be due after your death. There are some fundamental
principles that can enable you to manage your
financial and personal affairs during your
lifetime and distribute your wealth after
death.
Keep in mind that the information we will
share with you today is not intended as tax
or legal advice and may not be used for the
purpose of avoiding any federal tax penalties.
Please consult a professional for specific
information regarding your individual situation.
Today we will answer the following questions:
How does effective estate management help
you during your lifetime as well as after
your death?
What is a quick formula to estimate your estate
taxes?
What are the critical healthcare and financial
documents you need as part of your estate
plan? And
How does gifting factor into your estate planning
strategy?
To address the first question: How does effective
estate management help you during your lifetime
as well as after your death?
Estate planning can help you manage your financial
and personal affairs during your lifetime
and distribute your wealth and possessions
after your death according to your specific
wishes. That answer the first question.
That’s personal and powerful! Imagine that
your estate plan is done. If it is done well,
it can make a huge difference for you! It
can enable you to make your healthcare wishes
clear in advance in ways that may help ensure
they are carried out—even if you are unable
to communicate. And it can help ensure that
everything you have that is important to you
will go to the heirs you choose, without enduring
legal battles that can tie up your estate
and cause deep divisions within your family.
Effective estate management can help you avoid
needless expense in legal costs, and you can
provide for loved ones who may not be protected
otherwise. Aren’t these issues too important
for you to trust to luck? To specify your
wishes and help to determine the outcome,
you need to plan in advance.
Let’s address the second question: What
is a quick formula to estimate your estate
taxes? First, it’s important to understand
how estate taxes work. You can think of the
various estate planning principles and strategies
as a pyramid.
The foundation is formed by an understanding
of how estate taxes work. When you understand
how estate taxes work, you can see why it’s
important to collect certain critical estate
management documents. Then, you can top that
off by implementing specific strategies or
tactics to manage your estate. Let’s start
by discussing the bottom tier: How estate
taxes work.
Fact: In 2012, Congress passed the American
Tax Relief Act, making the estate tax a permanent
part of the tax code. But in 2017, the Tax
Cuts and Jobs Act was passed which reduced
statutory tax rates at almost all levels of
taxable income and doubled the estate tax
exemption which is now currently $11,580,000.
That law is currently set to expire on December
31, 2025. What does this mean for you?
If you don’t happen to have a complete set
of IRS tax tables in front of you – and
I don’t know why you would – this hypothetical
example shows a quick formula for estimating
your estate taxes.
Start with the gross value of your estate
which includes everything you own. We’ll
talk more about how to do that later. For
now, let’s assume in this hypothetical example
that your estate is valued at $12 million
dollars. Then, subtract the current legal
estate tax exemption amount of $11,580,000.
In this example, that results in $420,000.
This would be the taxable amount of your estate.
Then, you would multiply that $420,000 taxable
amount by 40% which is the federal tax bracket
for estates valued above $11,580,000 in size.
The resulting answer – which is $168,000
in this example – is your estimated estate
tax bill.
So, if you estimate the gross value of your
estate, which includes everything you have,
at more than $11,580,000, you may have an
estate tax bill and it’s possible that you
may benefit from estate management. And that
answers the second question. So what should
you do if you want to manage your estate?
You collect some documents.
That brings us to our third question: What
are the critical healthcare and financial
documents you need as part of your estate
plan? The first one is a will.
A will is the most basic estate planning document.
A will tells the world exactly where you want
your assets distributed when you die. Everyone
should have a will, but according to one study,
roughly 60% of Americans don’t have one.
That’s really short-sighted—and not just
for the wealthy—because if an individual
dies intestate, or without a will, it’s
up to the State to decide how his or her assets
will be distributed. Even if you have a trust,
you still need a will to take care of any
holdings outside of that trust when you die.
Do you have a will? A will
is the cornerstone of your estate.
It names an executor to oversee the process
of distributing your estate, it can name a
guardian for your minor children and it can
direct how your property is to be distributed.
But unfortunately, wills also have shortcomings.
Since wills are essentially instructions to
the probate court, they pretty much guarantee
probate and can be contested.
In fact, the probate court will send out notice
of the will to anyone who might have grounds
to contest it. And if someone wants to contest
it, there is the potential for a lengthy battle
in probate court. It’s true. I have personal
experience with this fact. The probate process
can be expensive, and it can take many months
or more than a year to resolve.
And since probate is a matter of public record,
if the only estate management tool you use
is a will, anyone who wants to can find out
how much you left and to whom.
We’ll talk more about how you can potentially
avoid probate and distribute your assets to
your heirs privately. But first, let’s talk
about the other critical healthcare and financial
documents you need as part of your estate
plan.
To really take care of your estate, in addition
to a will, you will also want to have a set
of healthcare and financial documents that
can help you pursue your estate management
goals.
These healthcare documents include “advanced
directives” such as your living will, power
of attorney and durable power of attorney
for healthcare, as well as financial documents
such as any agreements evidencing joint ownership,
durable power of attorney, and living trusts.
 
Let’s talk more about the important healthcare
documents you want to have as part of your
estate plan. Back in 2006, the case of Terry
Schiavo brought advance directives to the
forefront. As you may remember, Ms. Schiavo
was severely incapacitated, and her family
members battled for years about what should
be done. Since Ms. Schiavo did not have a
living will, her wishes were not known. In
spite of the high-profile nature of that case,
most Americans still do not have their healthcare
documents prepared and have not had a conversation
with loved ones about what level of care they
want if they are incapacitated.
A living will provides specific instructions
about your medical care if you become incapacitated
and unable to communicate. It goes into effect
immediately upon your incapacity and doesn’t
need to go through any additional legal proceedings.
A power of attorney document authorizes someone
to handle legal and financial decisions when
you become incapacitated. It can also go into
effect upon your incapacity, or upon any other
trigger event you specify. Like a living will,
a power of attorney does not need to go through
any additional legal proceedings. Individual
states can have different power of attorney
laws. So consider becoming familiar with your
state’s particular regulations in order
to make a more informed decision.
A durable power of attorney for healthcare
agreement authorizes someone to make decisions
for healthcare on your behalf. And, like the
living will and the power of attorney for
financial matters, it does not need to go
through any additional legal proceedings.
Considering the case of Terry Schiavo, would
your family know your wishes if you became
incapacitated?
Research shows that about 70% of older Americans
complete advance directives before their death,
and that’s up from only 30% who did that
10 years ago.
With extended life expectancy and a variety
of treatment options available, the chance
that you or someone close to you will benefit
from an advance directive is greater than
ever.
Next, what are the financial documents that
are crucial for you to have for an effective
estate management plan?
First of all, consider gathering documents
that evidence your joint ownership of any
assets. Joint ownership is a way for you to
hold title to property and pass it on to a
co-owner when you die, without the property
having to go through probate. Documents showing
joint ownership go into effect as soon as
joint ownership is recorded and do not need
to go through any additional legal proceedings.
Next, having a durable power of attorney allows
you to appoint a person or organization to
take care of your financial affairs when you
are unable to do so. It is “durable” because
it includes specific language that allows
it to remain in effect or to take effect if
you become mentally incompetent and can go
into effect immediately or when a specific
trigger event occurs—such as your incapacity.
Powers of attorney can be rescinded at any
time and do not need to go through any additional
legal proceedings.
Finally, having a living trust created while
you are still alive enables the transfer of
assets to heirs without going through probate.
Living trusts go into effect when you sign
the trust documents and transfer assets into
it. Living trusts do not need to go through
any additional legal proceedings. And that
answers the fourth question about the critical
healthcare and financial documents you need
as part of your estate plan.
Of course, estate management is more than
collecting documents. There are some key strategies
to help you as well. One of these is simple:
give money away while you’re still alive.
This brings us to our final question: How
does gifting factor into your estate planning
strategy?
The tax code currently allows you to gift
up to $15,000 to any one person in 2020 without
triggering any gift or estate taxes, or $30,000
to any one person if both you and your spouse
make the gift together. However, if you give
more than $15,000 to any one person, or $30,000
for you and your spouse to the same person,
you must pay gift tax on the amount that you
gifted above the $15,000 or $30,000 “per
giftee” exclusion amount. This annual exclusion
amount is indexed for inflation, which is
measured by the Consumer Price Index (CPI)
and rises in $1,000 increments as the CPI
increases. That means in future years if the
CPI rises, you may be able to give more per
year to each giftee without paying the gift
tax.
In addition, the current federal lifetime
gifting exemption limit is currently $11,580,000
in 2020. This means you can give up to a total
of $11,580,000 in gifts to others during your
lifetime without owing any federal tax – 
and couples can currently gift up to twice
that amount to others, or $23,160,000 throughout
their lifetimes without owing any federal
tax. But, keep in mind that some states may
have their own estate
tax regulations.
Gifting effectively lowers the amount of your
estate and therefore may help to lower any
estate taxes you owe. And that answers the
final question about how gifting may factor
into your estate planning strategy.
To summarize, today we’ve talked about how
effective estate management can help you during
your lifetime as well as after your death,
shared a quick formula for you to estimate
your estate taxes, briefly described the critical
healthcare and financial documents you need
as part of your estate plan, and discussed
how gifting factors into your estate planning
strategy. But now you may ask, is there more
I should know? Yes
Having a Trust can be another powerful estate
management tool. A trust is a legal entity
that can own property.
Properly structured trusts completely avoid
probate and avoid the delays and expense that
often accompany probate, they are not a matter
of public record and are a tool for maintaining
your privacy. They can provide very effective
management of your assets and their distribution
to your heirs, and even after your death,
trusts can provide some measure of control
over how your assets are distributed to children
and other beneficiaries. In addition, trusts
are much more difficult to contest than a
will.
Using a trust involves a complex set of tax
rules and regulations. Before moving forward
with a trust, consider working with a professional
who is familiar with the rules and regulations.
So what’s your next step? How do you put
together a management plan for your estate?
There are some crucial factors to consider
First, what’s the value of your estate?
As you make this calculation, make sure you
include all the property that you control
or have an interest in. [put slide down for
Tamara] This includes personal property, your
home, real estate, cash and bank accounts,
investments, retirement plans, business interests,
and life insurance—including the death benefits.
As we’ve previously mentioned, in 2020 the
gross value of your estate must exceed $11,580,000
for you to even be subject to the federal
estate tax. But even if you value your estate
at less than that, you should consider getting
your estate and healthcare documents in order
so that your wishes may be carried out.
Also, what are your estate management objectives?
Ask yourself the following questions: Who
do you want to inherit your assets? Who do
you want handling your financial affairs if
you’re ever incapacitated? Who do you want
making medical decisions for you if you become
unable to make them for yourself? [put slide
down] Do you want to provide for your spouse
if you should die first? Do you have young
children to provide for? If your children
are grown, do you want to distribute your
estate equitably—if not perfectly equally?
Will you need to provide cash to help your
heirs settle your estate? Well, the answers
to these and other concerns will vary with
each individual situation and can all be addressed
in a review.
There are a number of tools available to assist
you in effective estate management. But first,
you need a good estate management team in
place. That’s where we come in. We can help
you implement an effective estate management
strategy. If you think it may be time to take
a closer look at estate management, call us
today at 949-260-4747 to schedule a complimentary
consultation either virtually or in person.
Or visit our website at maptherightpath.com.
We’re always here to help!
This tri tip is almost done and it looks and
smells delicious! Wish you were here to join
us! Shall we eat?
Yes! Thank you for being here. We hope you
found the information we shared useful and
that you also grilled some good food to eat
for lunch now too! We will post this video
on our website in our Blog and also on our
YouTube channel if you want to see it again
or share it with others! And if you love what
you grilled please share your recipe with
us! We would love that!
Enjoy your lunch and have a safe and Happy
Labor Day weekend.
And stay COOL
it's a hot one
Bye.
