Estate planning

Jim and Nancy Lindsay, ages 72 and 70, respectively, are a married couple with one son, Todd, who is divorced. Their daughter Carol died of cancer twelve years ago, leaving their son-in-law Jonathan to raise their only grandchild Allison, now age 17.

Jim and Nancy have both retired after working at rewarding and lucrative careers.  They have acquired the following assets during their marriage.

· A family waterfront home, owned by Jim and Nancy as tenants by the entirety, currently valued at $1.6 million.

· A vacation home inherited by Nancy, currently valued at $320,000 and titled in Nancy’s name.

· A boat condominium owned by Jim, currently valued at $120,000.

· A fishing boat currently valued at $180,000 that Jim bought five years ago, but is now owned on a 50-50 basis by Jim and Todd as tenants in common.

· Jim’s car currently valued at $55,000 and Nancy’s car valued at $45,000.

· Household furnishings and antiques, owned by Jim and Nancy as tenants by the entirety, currently valued at $320,000.

· Personal items owned separately by Jim, currently valued at $30,000. Nancy’s jewelry and personal items are currently valued at $120,000.

· Jim’s IRA portfolio  currently valued at $900,000.

· A term life insurance policy, owned by Jim, who is the insured, with a face amount of $400,000 payable to Jim's estate as beneficiary.

· A whole life insurance policy, owned by Nancy, for which Jim is the insured and Nancy is the beneficiary of the $300,000 face amount. The replacement cost of the policy is $80,000.

· Whole life insurance policy owned by Jim, who is the insured and premium payer, with a $200,000 face amount payable to his granddaughter Allison, the sole beneficiary.

· Jim and Nancy have executed separate wills, powers of appointments and health care proxies naming each other as agents. Nancy’s will bequeaths the family vacation home to Todd for life, then to Allison.  Jim leaves his portion of the fishing boat to Todd. Each wills specifies that all other property of each spouse goes to the other, if living, otherwise in equal shares "... to our children, per stirpes."

Assume that Jim dies today. His funeral expenses are $22,000, and legal fees to settle his estate are $15,000. Also, there is a $37,000 mortgage to be paid off on the boat condominium, and $28,000 of Federal and State income taxes are due.