estate planning
Mario121
casestudy.docxMartin Becker, age 64, owns and manages a commercial printing shop in New England. Martin plans to retire this year and has recently accepted an offer to sell his company for $1.8 million. Martin and his wife Regina, age 63, bought a second home in Florida last year, where they intend to spend their winters. The couple has two children, Dave, age 40, and Debbie, age 37, who are both married and currently employed. Dave has one son, age 14, and Debbie has two daughters under the age of 10.
Martin's will provides that $200,000 of his estate will be placed into a power of appointment trust for Regina, and Regina is the sole trustee. The remainder of his estate is to be placed into a bypass trust with income payable to Regina for her life as needed. Regina will have a right to invade the corpus for health, education, maintenance, and support, and at her death any remaining corpus will be distributed to their children per stirpes.
Regina has some separate assets she inherited from her father. The first is a rare coin collection that was worth $180,000 at her father's death eight years ago, which is currently valued at $235,000. She also inherited his stock portfolio worth $86,000 which is now valued at $108,000. Regina was the sole beneficiary of her father's whole life insurance policy for which she received a death benefit of $200,000. She deposited that money in a separate account then used it to buy a duplex with her neighbor near a ski resort. Regina contributed $180,000 toward the $300,000 purchase price, and they titled the property together as Tenants-in-Common. Regina's will provides for all of her estate to pass to Martin or, if he predeceases her, to their two children equally.
Martin created an irrevocable life insurance trust two years ago, and transferred a whole life policy with a face value of $1 million into the trust. Regina will receive the income for life, and their two children will receive the corpus equally at Regina's death.
Anita Morrison is a 62 year old widow who recently lost her husband Bob to a heart attack at age 64. Bob was a civil engineer who was planning to retire next year and Anita is a former librarian and an author of books for teenagers.
Anita and Bob were married for 38 years and they have three children. Lynn, age 36, is married with three children and lives in a different state. Jimmy, age 34, is married with two children. Jill, age 31, is single and has a mental illness for which she receives Social Security disability benefits. Jill lives at home with Anita since she requires some supervised care. All of Anita’s grandchildren are under 12 years of age.
Anita and Bob owned their home as tenants by the entirety in a common law state, which was valued at $800,000 at Bob’s death. Bob had originally bought their home in 1972 for $42,000. They owned a joint checking account worth $22,000 and a money market account worth $80,000. Bob’s investment portfolio passed TOD to Anita and was valued at $300,000 at his death. Bob’s IRA, worth $250,000, named Anita as beneficiary. Bob was also the owner and the insured of a whole life insurance policy payable to Anita with a death benefit of $2 million. Anita is also the beneficiary of Bob’s group term life insurance policy of $100,000.
Anita receives royalties from her books that bring in an average income of $40,000 per year. She is a popular author who is frequently invited to speak at local book stores, schools, libraries and non-profit organizations. Anita has contributed generously to libraries over the years and wants to continue making financial donations to them. However, Anita is most concerned about Jill’s future and wants to make sure that Jill will be financially secure after Anita’s death. Anita also wants to set money aside for her grandchildren’s college education, if possible.
