Advisors Guide to Estate Planning

Learning Objectives (By Chapter) 1. Introduction to Estate Planning Recognize the importance of estate planning and what it can accomplish. Identify the unauthorized practice of law. Identify the financial planning practitioner’s role and responsibilities in the estate planning process. List fiduciary duties and identify the parties that would be subject to them. 2. Property Interests Compare and contrast the most common forms of property ownership and how they affect the gross estate, the probate estate, marital deductions, and step-up in basis. Understand the implications of how property ownership affects the manner in which assets will be distributed at a decedent’s death. 3. Community Property Identify the types of property that are community property interests and those that are not. Understand the implications of moving from a community property state to a non-community property state and vice versa. 4. Methods of Property Transfer at Death Understand the characteristics and consequences of using alternative methods of transferring property at death, including contracts, trusts, and property passing by operation of law. Select the most appropriate property transfer mechanism for a client’s situation. 5. The Probate Process Understand the probate process, its advantages, disadvantages, and costs. Know the various ways to avoid probate. Recognize the implications of ancillary probate. 6. Wills Identify the types of wills and the manner in which assets will pass per the terms of a will. Understand the legal requirements of a will. Understand the manner in which a will can be modified or revoked. 7. Incapacity Planning Identify the different documents that provide for incapacity planning. Compare the different types of powers of attorney. Know the provisions that should be contained in a power of attorney. Recognize the importance of coordinating special needs trust planning with available government benefits. Understand the need to coordinate Medicaid planning with state law. 8. Trusts Define and describe the uses of the four types of trusts, including revocable, irrevocable, inter-vivos, and testamentary. Know the basic components of trusts, including identifying the parties to a trust. Identify and explain the operating terms of a trust and the dispositive provisions of a trust. 9. Income Taxation of Trusts, Estates, and Beneficiaries Recognize the income tax consequences of simple versus complex trusts. Identify a grantor trust. Describe the tax consequences for both the decedent and heir/beneficiary for income included in a decedent’s gross estate and/or final income tax return. Calculate the IRD deduction for one or more sources. 10. Gifting Strategies Recognize the tax and non-tax advantages of gifting. Identify the best property interests to gift, according to a client’s objectives. Know the purpose and nature of the gift tax law. Recognize when a completed transfer has occurred. 11. Gift Tax Calculation Identify exempt gifts. Calculate taxable gifts. Calculate the current year’s gift tax liability. Calculate the amount of unified credit that remains after a taxable gift is made. Recognize that taxable gifts are reported as adjusted taxable gifts on the estate tax return. 12. Gifts to Minors Know the tax advantages of making lifetime gifts to minors. Unerstand the similarities and differences between a UGMA account and a UTMA account. Identify the income tax-shifting strategies available for families. 13. The Gross Estate Know property included in a decedent’s estate. Identify which separately owned property interests are included in a decedent’s gross estate. 14. Estate Tax Calculation Identify which deductions may be taken from the gross estate. Determine which credits are available to a decedent to reduce the estate tax. Demonstrate how to compute an estate tax for different client situations. 15. The Marital Deduction Understand the appropriate use of the marital deduction for estate planning purposes. Define the requirements for a qualified transfer. Determine the amount of a marital deduction for all property interests included in a decedent spouse’s estate. Know the requirements of a qualified domestic trust. 16. Marital Trusts Describe the tax and nontax characteristics of the bypass trust. Evaluate when a particular marital trust should be used to meet clients’ estate planning objectives. Know the relationship between the marital deduction and the qualified terminable interest property trust. Determine when estate equalization should be used to minimize tax on a couple’s combined estates. Know the benefits and disadvantages of portability. 17. Charitable Transfers Know the income, gift, and estate tax consequences of charitable transfers. Identify and select the various charitable transfer vehicles that are appropriate for a client based on current and future income needs and tax advantages. Unerstand the differences between charitable remainder trusts and a charitable lead trust. 18. State Death Tax Deduction Understand the difference between the state death tax deduction and the state death tax credit. Know the differences between a sponge tax, inheritance tax, and estate tax at the state level. 19. Generation-Skipping Transfer Tax Identify the circumstances that trigger the generation-skipping transfer (GST) tax. Know when an annual exclusion applies to a gift made to a skip person or a skip person trust. Recognize how the GST exemption is allocated to different transfers to reduce or eliminate the GST tax. Calculate the federal GST tax on a lifetime gift and on a bequest. 20. Powers of Appointment Distinguish general powers of appointments from special powers. Understand the gift and estate tax implications of powers of appointment. Understand how Crummey powers affect gift and estate taxes for grantors and trust beneficiaries. 21. Life Insurance Planning Identify the most appropriate types of insurance policies to meet specific client objectives. Evaluate the estate, probate, and gift tax consequences of owning and transferring a life insurance policy. 22. Irrevocable Life Insurance Trusts Know and contrast the characteristics and tax aspects of a funded ILIT with an unfunded ILIT. Recognize the advantages and tax implications of dynasty trusts. 23. Estate Planning with Retirement Benefits Understand the distribution options available to different classes of beneficiaries of retirement plans. Recognize the income tax implications that a beneficiary faces upon receiving retirement plan assets. 24. Estate Freeze Strategies Know when and how to apply the preferred stock recapitalization technique. Recognize the circumstances when a qualified interest trust is appropriate for clients. Evaluate the gift and estate tax ramifications of using GRITs, GRATs, GRUTs, and QPRTs. 25. Intra-family and Other Business Transfer Techniques Compare and contrast the different types of business transfer techniques. Know the gift and estate tax implications of each business transfer technique. Recommend appropriate business transfer techniques such as installment sales, private annuities, SCINs, gift and sale leasebacks, or IDGTs. 26. Family Limited Partnerships and Limited Liability Companies Evaluate how family limited partnerships and limited liability companies might apply to a client’s situation. Understand gift and estate tax implications for FLPs and LLCs. 27. Business Planning Strategies Identify the different types of insurance policies and ownership arrangements available to business owners and employees. Know the considerations involved in business succession planning. Understand the purpose and structure of business continuation agreements. Identify the various types of postmortem planning techniques available to business owners and recognize when they can be implemented. 28. Estate Planning for Non-traditional Relationships Identify the impact of divorce and/or remarriage on an estate plan, including asset titling and distribution, changes in beneficiary status, and selection of heirs. Know how asset ownership, tax laws, and government policies affect estate planning for same-sex or unmarried couples. Identify the legal documents, agreements, and trusts that benefit individuals in non-traditional relationships. 29. The Intersection of Income and Estate Planning Describe client considerations for structuring a tax-efficient legacy. Compare the advantages and disadvantages of lifetime gifts to individuals and charity. Identify the income tax effects of property gifted or bequeathed to individuals, trusts and charity. Evaluate the income tax implications of portability; bypass trust planning and qualified disclaimers. 30. Common Estate Planning Considerations Identify the types of trusts, techniques, and deductions that reduce the estate tax base.