Bob and Sally are in their 60's and have 2 grown children who have homes, families, and careers of their own. Their estate is approximately $1 million, including $300,000 in life insurance, a home with no mortgage, and several IRA's and a 401k with a total value of $500,000, accumulated over the course of Bob's career with a major corporation. The rest of their assets are in various financial instruments and personal property.
They wanted to ultimately divide the estate among their 2 children and their ministry interests. Earlier in life, when their children were younger, the larger share of the estate would have gone to the children, but now, realizing that the children are doing well, they decided to cap the children's inheritance at $150,000 each.
They considered creating an education trust for their grandchildren, but decided instead that since their children were responsible parents, they would leave token gifts to each grandchild, and trust that their children would be the best judges of how and when to make funds available to the grandchildren.
Bob and Sally created a Revocable Living Trust to ease the administration of their estate and to avoid probate. Their documents included Pour Over Wills designed to coordinate with the Trust, along with Durable General Powers of Attorney, Health Care Powers of Attorney, and Living Wills/Directives to Physicians.
Within the Revocable Living Trust, the full estate flows to the surviving spouse at the death of the first spouse, using a Bypass Trust structure to shelter the maximum amount allowed from estate taxes at the death of the surviving spouse.
Then, at the death of the surviving spouse, gifts will be made to their grandchildren and each of their children will receive $150,000. The balance of their estate will go to the ministries that have been important to Bob and Sally. Language was included in the trust to require that the charitable gift include any value remaining in their tax deferred retirement assets so as to eliminate the income taxes that would otherwise be due if those assets passed to the children.
Scott and Mary are in their late 40s and have three children ranging in age from 22-27. Their estate is approximately $2.4 million, including $500,000 in life insurance, a home with $325,000 equity, and several IRAs and a 401k with a total value of $750,000 (all tax-deferred), accumulated over the course of Scott's career with a major corporation. The rest of their assets are in various financial investments, personal property, and an inheritance coming from Bob's deceased grandmother's estate.
They wanted to ultimately divide the estate among their three children and their ministry interests, treating the ministries, collectively, as one additional child. Thus, each of the children is to receive 25% of the estate, and 25% will be allocated among their organizations. Because their children are no longer dependents, Scott and Mary were comfortable making an outright gift to charity if they were to die soon, but they wanted to preserve benefits for the children from their retirement assets on the assumption that those investments could grow substantially in future years.
Scott and Mary created a Revocable Living Trust to ease the administration of their estate and to avoid probate. Their documents included Pour-over Wills designed to coordinate with the trust, along with Durable General Powers of Attorney, Health Care Powers of Attorney, and Living Wills/Directives to Physicians.
Within their Revocable Living Trust, the full estate will flow to the surviving spouse at the death of the first spouse, using a Bypass Trust structure to shelter the maximum amount allowed from estate taxes at the death of the surviving spouse.
Then, at the death of the surviving spouse, 25% of the estate will be an outright gift to charity, to be paid first from any remaining value in their tax-deferred retirement assets, thus eliminating all the income taxes that would otherwise have to be paid after their deaths.
Finally, any tax-deferred retirement assets exceeding the 25% of the estate intended for charity would go into a tax-exempt TCRT (Testamentary Charitable Remainder Trust) in order to eliminate the balance of income taxes associated with these assets. This TCRT would pay the children 7% of the trust amount each year for 15 years; over this 15-year period, more than 100% of the original value will have been distributed to their children. At the termination of this trust, its remaining principal will go to charity. Finally, the balance of the estate (all the non-retirement assets) will go outright to the three children in equal shares.
Ann is in her 50s and has two grown children who have homes, families, and careers of their own. A third child died as a teenager, leaving no heirs.
Her estate is approximately $1 million, including an IRA with a total value of $150,000 (all tax-deferred). The rest of her assets are in various financial investments and personal property.
She originally planned to divide the estate into four equal shares among her three children and her ministry interests, but the death of her youngest son changed that. She decided to stick with her original plan of giving each of her two remaining children 25% of the estate. The remaining 50% of the estate went to ministry as a memorial gift to her deceased child.
She considered creating an Education Trust for her grandchildren, but decided instead that since her children were responsible parents, she would leave token gifts to each grandchild and trust that her children would be the best judges of how and when to make funds available to the grandchildren.
Because Ann lives in a state where probate is not a concern, she created a Will along with a Durable General Power of Attorney, a Health Care Power of Attorney, and a Living Will/Directive to Physicians.
Within the Will, at Ann's death, specific gifts will be made to her grandchildren. Then, each of her surviving children will receive 25% of the estate, and charities will receive 50% of the estate. Ann has now begun working with two of her key ministries to set up the parameters of the scholarship funds that she wants to establish in the memory of her deceased son.
Language was included in the Will to require that the charitable gift include any value remaining in her tax-deferred retirement assets so as to eliminate the income taxes that would otherwise be due if those assets passed to the children.
PO Box 6200
Springfield, MO 65801
U.S.A.
580 W. Central St.
Springfield, MO 65802
U.S.A.
