ESTATE PLANNING INFORMATION FORM This form is designed to provide me with the basic information necessary to prepare your last will and testament, a financial power of attorney, a medical directive ( living will ), a medical power of attorney and a written authorization to disclose your personal medical information to anyone who will be making medical decisions for you in the event you are unable to do so for yourself (a HIPAA consent). If you are married, each spouse should complete a separate copy of this form. Part of the process will involve appointing persons to serve in positions of trust for the purpose of settling your estate, managing your property for you if you become incapacitated, and making medical treatment decisions for you if you become incapacitated. These positions are briefly described as follows: Executor The person you appoint to take the responsibility for having your will admitted to probate, paying your debts, filing final tax returns and distributing your remaining property to the beneficiaries named in the will. You may appoint two persons as coexecutors, but it is almost always a bad idea to do so. A single executor will be able to accomplish his or her job more efficiently than two or more co-executors. Trustee The person you appoint to manage any portion of your estate that goes into a trust. The trust will be part of the will, rather than being in a separate document. In most cases, a trustee will provide responsible management of property held for a beneficiary who is too young to manage his or her own funds, or for an adult beneficiary who is incapacitated. Cotrustees may be appointed, and the advice I gave you in the previous paragraph regarding coexecutors does not necessarily apply to co-trustees. Guardian The person or persons who will take over raising your children if you die before they reach the age of 18. This will often be a married couple serving as co-guardians. Agent under Financial Power of Attorney This person will have the power to manage your property and finances for you during your life, and you may appoint the agent to have this authority immediately, or only in the event of your incapacity. Agent under Medical Power of Attorney This person will have the power to medical treatment decisions for you if you become incapacitated. Any two or more of the foregoing positions may be held by the same person. It is advisable to appoint one or more successors to serve in each of these positions, in case the first person you choose is unavailable or unwilling to serve. Consider carefully the appointments you make in the documents I will be preparing for you, as each job is very important and involves great trust and responsibility. If you have reservations about appointing friends or family members as trustees, you may want to consider appointing a corporate trustee (a bank or trust company) as your trustee, particularly if you anticipate that a trust will last for many years or if it will own substantial property or investments. Page 1 of 9
YOUR FULL NAME: EMAIL ADDRESS: DATE OF BIRTH: HOME ADDRESS: COUNTY OF RESIDENCE: HOME PHONE: WORK PHONE: CELL PHONE: Send Mail Where? Home Office Other OCCUPATION: EMPLOYER: WORK ADDRESS: YOUR SPOUSE: Name: Date of birth: Date of marriage: US citizen? YOUR CHILDREN: 1. Name: Date of birth: Page 2 of 9
2. Name: Date of birth: 3. Name: Date of birth: 4. Name: Date of birth: 5. Name: Date of birth: 6. Name: Date of birth: Do you plan to have more children in the future? Page 3 of 9
WHOM DO YOU WANT TO NAME AS THE EXECUTOR OF YOUR ESTATE? Name Relationship 1. 2. 3. WHOM DO YOU WANT TO NAME AS THE TRUSTEE UNDER YOUR WILL? Name Relationship 1. 2. 3. WHOM DO YOU WANT TO NAME AS GUARDIAN(S) OF YOUR CHILDREN (if applicable)? Name Relationship 1. 2. 3. WHOM DO YOU WANT TO NAME AS AGENT ON YOUR FINANCIAL POWER OF ATTORNEY? Name Relationship 1. 2. 3. WHOM DO YOU WANT TO NAME AS AGENT ON YOUR MEDICAL POWER OF ATTORNEY? 1. Name: Page 4 of 9
2. Name: 3. Name: HOW DO YOU WANT YOUR ESTATE DISTRIBUTED AFTER YOUR DEATH? I want to leave all my property outright to my spouse, if he or she is living. If I do not have a living spouse, to my children, with an equal share to each child. If a child is under the age of, his or her share shall be held by my trustee until that age is attained. I want to leave my property as follows: Page 5 of 9
ASSET INFORMATION VALUE DESCRIPTION Life Insurance IRAs, 401(k) s, Profit Sharing, etc. Residence Other Real Estate Mineral interests Stocks, Bonds, Mutual Funds Cash, CD s Savings, Checking Notes Where People Owe You Money Business Interests Cars, Jewelry, Furniture, etc. (Use a separate sheet if the above blanks are not sufficient.) Safekeeping of documents. The documents I prepare for you should be kept in a safe place. We maintain a vault in the bank downstairs for the purpose of storing our clients original wills, at no charge. If you wish to take advantage of this service, we will provide you with photocopies of your will and mail the signed originals of the other documents to you. You will be responsible for notifying your executor and your family of the location where the will is stored. Also, PLEASE let us know when you move so that we may keep in contact with you, and if you decide to have a new will prepared by another law firm, please tell us whether you want your will mailed back to you or shredded. Page 6 of 9
NON-PROBATE PROPERTY Please keep in mind that your will only passes ownership of your property that is subject to probate ( probate property ). It does not dispose of non-probate property. Non-probate property includes the following: P.O.D. accounts An account held by a bank or other financial institution that has a payable-on-death beneficiary. The beneficiary gets the account regardless of what your will says. Joint tenancy property Property (usually a bank or investment account) held by you and one or more other persons as joint tenants with rights of survivorship. The surviving owner(s) gets the account regardless of what your will says. Real estate is often owned by joint tenants in other states, but rarely in Texas. Life insurance Will be paid to the named beneficiary, regardless of what your will says. If there is no surviving beneficiary, it usually goes to your estate to be distributed under your will. Retirement accounts (IRA, 401(k), etc.) Will be paid to the named beneficiary, regardless of what your will says. If there is no surviving beneficiary, it usually goes to your estate to be distributed under your will. Annuities If there is a death benefit, it will be paid to the named beneficiary, regardless of what your will says. If there is no surviving beneficiary, it usually goes to your estate to be distributed under your will. Thus, an important part of planning your estate involves paying attention to how investment accounts are styled and to making appropriate beneficiary designations. It s very important to make sure that young children are not named as beneficiaries, or contingent beneficiaries of life insurance and retirement accounts. A more appropriate way to direct these assets to your children is to name the trustee under your will as beneficiary, instead of the children. I will help you with this. Please return this form to me when complete. Frank Mapel Hoover Slovacek LLP 5847 San Felipe, Suite 2200 (my office is in Suite 2375) Houston, Texas 77057 713-977-8686- phone 713-977-5395- fax mapel@hooverslovacek.com Page 7 of 9
A FEW WORDS ABOUT RECENT CHANGES TO THE ESTATE AND GIFT TAX LAWS As you are probably aware, Congress recently enacted legislation affecting the estate and gift tax laws, known as the 2010 Tax Relief Act. Before the new law, there was no estate tax for 2010, but some beneficiaries could have faced higher taxes because there were less favorable income tax basis rules. Also, under the prior law, estate and other transfer taxes were scheduled to rise substantially for post-2010 transfers. Overview of the new law. The 2010 Tax Relief Act provides temporary relief. Among other changes, it reduces estate, gift and generation-skipping transfer (GST) taxes for 2011 and 2012. It preserves estate tax repeal for 2010, but in a roundabout way: estates wanting zero estate tax for 2010 must elect that option, along with the less favorable modified carryover basis rules that were set to apply for 2010. Otherwise, by default, the estate tax is revived for 2010, with a $5 million exemption, a top tax rate of 35%, and a step-up in basis. Also, for estates of decedents dying after Dec. 31, 2010, a deceased spouse's unused exemption may be shifted to the surviving spouse. However, these generous rules are temporary much harsher rules are slated to return after 2012. Lower rate and higher exemption for 2011 and 2012. For estates of individuals dying in 2009, the top estate tax rate was 45% and there was a $3.5 million exemption. The top rate was to rise to 55% for estates of individuals dying after 2010, and the exemption was to be $1 million. For 2011 and 2012, the 2010 Tax Relief Act reduces the top rate to 35%. It also increases the exemption to $5 million for 2011 with a further increase for inflation in 2012. But these changes are temporary. After 2012, the top rate will be 55%, and the exemption will be $1 million. Special tax saving choice for 2010. The 2010 Tax Relief Act allows estates of decedents who died in 2010 to choose between (1) estate tax (based on a $5 million exemption and 35% top rate) and a step-up in basis, or (2) no estate tax and modified carryover basis. Basis is the yardstick for measuring income tax gain or loss when an asset is sold. With a step-up in basis, pre-death gain is eliminated because the basis in the heir's hands is increased to the date of death value of the asset. On the other hand, with a modified carryover basis, an heir gets the decedent's original basis, plus certain increases, which can be substantial. Even so, if the decedent had a relatively low basis and significant assets, some pre-death gain may be taxed when the heir sells the property. These concerns factor into the special choice for 2010. The executor should make whichever choice would produce the lowest combined estate and income taxes for the estate and its beneficiaries. This would depend, among other factors, on the decedent's basis in the assets immediately before death and how soon the estate beneficiaries may sell the assets. Gift tax changes. Years ago, the gift tax and the estate tax were unified they shared a single exemption and were subject to the same rates. This was not the case in recent years. For example, in 2010, the top gift tax rate was 35% and the exemption was $1 million. For gifts made after Dec. 31, 2010, the gift tax and estate tax are reunified and an overall $5 million exemption applies. GST tax changes. The generation-skipping transfer tax ( GST tax ) is an additional tax on gifts and bequests to grandchildren when their parents are still alive. The 2010 Tax Relief Act lowers GST taxes for 2011 and 2012 by increasing the exemption amount from $1 million to $5 million (as indexed after 2011) and reducing the rate from 55% to 35%. Page 8 of 9
New portability feature. Under the 2010 Tax Relief Act, any exemption that remains unused as of the death of a spouse who dies after Dec. 31, 2010 and before Jan. 1, 2013 is generally available for use by the surviving spouse in addition to his or her own $5 million exemption for taxable transfers made during life or at death. Under prior law, the exemption of the first spouse to die would be lost if not used. This could happen where the spouse with resources below the exemption amount died before the richer spouse. One way to address that was to set up a trust for the poorer spouse. Now, the portability rule may make setting up a trust unnecessary in some cases. But there still may be other reasons to employ credit shelter trusts. For example, a credit shelter trust may protect appreciation occurring between the death of the first spouse and the death of the second spouse from being subject to estate tax. Such a trust also can protect against creditors. Plus, the transferred exemption may be lost if the surviving spouse remarries and is again widowed. Conclusion. The estate tax relief in the new law is substantial, but it is temporary. Estate planning to reduce taxes remains an important consideration. Even if taxes are not a concern because an estate is below the exemption level, it is important to have a proper estate plan to ensure that the needs of intended beneficiaries are met. Please schedule an appointment with us to discuss how you and your family can make the best use of the new estate and gift tax rules. Page 9 of 9