Pl Plan annin ning g fo for Li r Life fe an and d Be Beyo yond nd In Intr troduct duction ion to to Es Esta tate te Pla lannin ing Webinar – June 20, 2020 NANBEN panel discussion on Estate Planning – Wills and Trusts
SU SUMMARY The NANBEN panel of experts will present an introduction to Estate Planning and discuss the key building blocks to create a Plan – Wills, Trusts, Life Insurance and Power of Attorney. The panel will provide a practical perspective on how to create an Estate Plan and the different avenues to create a good plan. 2
TODAY’S SPEAKERS Mark Chockalingam who leads the NANBEN investments group will moderate the session on Estate Planning. Kanna Meyyappan is a professional Chemical Engineer and has worked in the Oil & Gas consulting industry for 30+ years in the US. Retired in 2018 and has pursued financial planning and retirement strategies and has been mentoring high school kids. Selvan Boominathan is an attorney specializing in tax issues for startups. He has been practicing for 15 years in the Washington DC area predominantly helping small businesses to minimize their tax impact. Srinivasan Palaniappan is an Enterprise Architect by profession enabling commercial clients succeed in their Digital Commerce mission. A Happy Camper living in the DC region for about 18+ years. He has worked with an attorney on setting up an Estate Plan. Kanna Meyyappan, Selvan Boominathan and Srinivasan Palaniappan have been involved in their own retirement planning process and will share their knowledge and experience in today’s session. 3 3
Qui uick k Po Poll l ✓ Do you have an Estate Plan ✓ Yes ✓ No? ✓ If you do have a Plan, you have a ✓ Will ✓ Trust ✓ Both 4
DISC SCLAI AIMER MER This presentation is of a general nature and is provided for informational purposes only for the personal use of the audience. This presentation is not tax advice and is not intended to provide advice on any specific situation. This presentation is also not intended to provide financial planning advice. The intent is to create only awareness among the audience to set up their estate plan and share some general guidelines. Individuals should get appropriate professional advice to do their financial planning. The views expressed by the speakers during this presentation represent the speakers’ personal opinions and do not reflect the views of any organization. 5 5
Ob Obje jecti tives ves 1. What is an estate plan? 2. Why is it important? 3. How to get it done? 4. Practical Perspectives 5. Cross-border issues 6 6
WHA HAT IS A S AN EST ESTATE E PL PLAN? Simply: any plan to transfer assets. Can be before ● or after death. Basic estate plan for most people has 3 elements: ● Living Trust, ○ Will, and ○ Powers of Attorney (financial, medical, etc.) ○ PLUS Life insurance - Not technically part of the ○ estate plan, but plays an important part in planning for life and beyond 7 7
INTRODUCT ODUCTION ION TO O SE SENTHI HIL L AND VA VALLIAMMA MAI I FAMILY Get to know Senthil and Valliammai family - ● Typical family ○ Senthil - Husband (Spouse); Age 40, working professional ○ Valliammai - Wife (Spouse); Age 38, works for a firm ○ Palani (son - 10 years old) & Meena (daughter - 8 years old) ● Financial status: ○ USA ■ Owns a home ■ Checking and Savings accounts ■ Portfolio of stocks and bonds ■ Jewelry & Antique ○ India ■ Owns a home ■ Owns some lands 8 8
BA BASI SIC C DEF EFINITI ITIONS ONS - TRUS USTS Trust: ● Entity created under state law to hold and manage assets (corpus) ● Irrevocable/Revocable ○ We will be discussing only revocable trusts. Irrevocable trusts are rare and done for specific reasons. Settlor: The person who creates the trust. A.K.A “grantor”. Trustee(s): Fiduciary agent who is entrusted to manage the trust. State law and the Trust document governs the rights/responsibilities. Trustee powers can be split Beneficiary: people or entities benefit from the Trust/Will Trust Certification - notarized 9 9
BA BASI SIC C DEF EFINITI ITIONS ONS - WILLS LS Will: Legal document that declares how property will be inherited upon death. ● A.K.A “last will and testament” ● Each state has different rules about what is a will. Some are expansive (even a note written on a napkin right before death can be a will). ● However, best practice is to have the will notarized and witnessed. Decedent: Person who dies. Executor: Person who executes the will. Makes sure the property is given according to the will. The will specifies the powers of the executor. Heir(s) : Person/entity that inherits assets upon Decedent’s death 10 10
Es Esta tate te Pla Plan fo n for Se Sent nthi hil l an and Va Valliam amma mai ● Nagarathar culture – raising kids responsibly and supporting them through out. Key is to support them if something unexpected happens to us ● The Senthil-Valliammai Trust dated June 15, 2010 ○ Revocable ○ Settlors- Senthil & Valliammai ○ Trustees - Senthil & Valliammai ○ Second set of Trustees if both die at the same time and the kids are minors: ■ Ganesh - Senthil’s brother ■ Alagu - Valli’s sister ○ Beneficiaries: ■ Kids - Palani & Meena and any kids in the future ● Will ○ Prepared and signed on the same day (June 15, 2010) ■ Kids share all the assets equally (based on the appraised value) ■ May assign specific items to selected individuals (jewelry, real estate, etc.) ■ May add a charity and assign specific proceeds ○ Executor - could be the same trustees 11 11
BA BASI SIC C DEF EFINITI ITIONS ONS - POA POA Powers of Attorney Advanced Health Care directive: type of durable power of attorney specific to medical care ● “Durable” means this POA is in force even if the grantor is disabled ● Can specify the kinds of life-saving measures to be used, medical professionals and facilities to be consulted, etc. ● Tip: ○ Choose your POA carefully to minimize emotional decisions Financial power of attorney: POA specific to financial matters, can be durable or non-durable 12 12
BA BASI SIC C DEF EFINITI ITIONS ONS - LIFE IN E INSU SURAN ANCE CE Life Insurance ● Insured – The person(s) covered by the insurance policy. ● Face Amount – The dollar amount that the insurance policy would pay out upon the death of the Insured. ● Primary Beneficiary – The person(s) designated to receive insurance proceeds upon the death of the Insured. ● Contingent Beneficiary – The person(s) designated to receive the insurance proceeds if the Primary Beneficiary is no longer living. 13 13
BA BASI SIC C DEF EFINITI ITIONS ONS - LIFE IN E INSU SURAN ANCE CE Term Life Coverage – The type of coverage that lasts for only a specified period of time (the ● “term”) and has a defined ending date. The face amount would be paid to the designated beneficiary if the Insured dies while the policy is in force. Relatively inexpensive. Whole Life Coverage – The type of coverage that can last for as long as the Insured is alive, ● provided that all of the premiums are paid. This type of coverage usually keeps the same premium rate throughout the life of the policy. Premiums could be paid up in a fixed time period (10 to 25 years). 14 14
LIFE E INSU SURANCE NCE DET ETER ERMINA INATIO TION How Much Life Insurance Do You Need? ● Several calculators online to see how much you need. For example: https://www.bankrate.com/calculators/insurance/ life-insurance-calculator.aspx ● Beneficiaries: Spouse & Children; Pro Tip : Avoid your Trust as beneficiary - The insurance proceeds are tax free to the beneficiary! 15 15
SE SENTHI HIL L AND VA VALLIAMMA MAI I FAMILY ● The Senthil-Valliammai POA ○ Financial - Same trustees or a different person ○ Health – Advanced Health directive established: preferably a close trusted friend (to minimize emotional influence) or along with a trustee ● Life insurance ○ Term life on Senthil - $2 MM ( 25 years fixed rate expiring @ 60) ○ Term life on Valliammai- $1 MM ( 25 years fixed rate expiring @ 55) ○ Whole life for $100K each on Senthil and Valliammai ○ Used insurance calculators to estimate the face value for various situations ● Separate will (hand written and attested by witnesses or Notary) for Indian assets - home and lands 16 16
WHA HAT HA HAPP PPEN ENS S IF YOU YOU DO N O NOT OT HA HAVE VE AN EST ESTATE E PL PLAN? For example, in California: ● Any community property (joint assets held by married couple) will go to the spouse ● Accounts with named beneficiaries are transferred Probate for remainder: ● Cap: If remainder is less than $150K, then no probate ● Process can take 6 months to 1 year, attorneys fees of 1- 4% of total gross asset value, and court fees ● Probate Process: Appoint an executor, gather up Decedent's assets, file estate tax return, file inventory and appraisal of all assets with the court, pay out all benefits and bills Pro Tip : Estate plan is critical to transfer assets to the next generation. 17 17
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