Asset Protection Made Easy!

Establishing a Comprehensive Strategy to Safeguard Your Wealth!

Any book on the topic of getting rich ought to include a chapter on how wealth is protected.
Unfortunately many authors, including myself, who are business coaches take the position that
devising and implementing strategies for the preservation of wealth is something that should
only be taught, much less considered, after one is well on their way to creating a sizable rich
fortune. However, many rich individuals never take the time to safeguard their money until they
come to realize that their assets are exposed. Oftentimes, it will be too late to devise such a plan.

The truth is that EVERYONE needs to be concerned about wealth preservation strategies, even
those of us who are just starting to achieve our financial goals. With the proper strategies in place
many headaches can be avoided before an home based entrepreneur makes their first million
dollars.

So what, exactly, are the dangers to wealth? In this chapter, we’re not going to be discussing
bank robbers or natural disasters. Instead we’ll focus on three specific threats to wealth that
everyone needs to plan for:

Lawsuits

Income taxes

Estate taxes & probate

Asset Protection

It has been estimated that every week there are over 75,000 new lawsuits filed, something that I
like to refer to as the “lawsuit explosion.” Many people believe that as long as they conduct their
personal and business affairs with caution, they will never need to worry about being sued.
Unfortunately, this is not the case. Simply put, there is no way to prevent someone from suing
you, not matter how frivolous their case may be. In actuality, the determination of whether or not
the potential defendant has any identifiable and attachable assets determines whether a lawsuit is
filed.

Essential Steps to Protecting Your Assets

Since we’ve got this type of landscape at work against us, it becomes imperative that we take the
necessary steps to protect our assets. Protecting your assets depends upon the strength of how
your “asset security system” is designed and installed. How do you do this? You put into place
an asset protection strategy. The first step in doing this is to realize that it is more likely than not
that you and/or your business will be sued. No matter how carefully and ethically you conduct
yourself and your business it is still likely that you’re going to be sued. Once you recognize this,
you can take steps to ensure that the lawsuit you face won’t be one that wipes out both your
personal and business assets.

The second step of putting your asset protection strategy into place is to recruit and organize
professionals who can help you accomplish this goal. Who are these people? Most likely, you’ll
need an attorney and an accountant who are both skilled at asset protection structures and the
methods for their successful implementation. Don’t worry, this should not be overly cost
prohibitive. In fact, many successful entrepreneurs and investors consider this to be one of their
best investments. Third, you need to prioritize your objectives. In most cases, how you
implement an asset protection strategy has a high likelihood of affecting (either adversely or
positively) your tax and estate planning. If this is the case, you have to look at your overall
financial situation and decide how to best protect your assets in a way that doesn’t materially
alter your other financial planning objectives.

The third step in building your asset protection strategy is to measure your wealth. Is your
cumulative wealth a golden egg or a turnip? How do you expect your wealth to change in the
future? These considerations are essential in deciding the right asset protection strategy for you.

Fourth, you’ve got to put your plan into place. There are many different types of asset protection
strategies, but most, if not all, of them involve the use of business entities. A business entity is a
formal business structure that is created by filing formation paperwork with the Secretary of
State. Business entities are “individuals” under the law and as such they are responsible for their
own debts and obligations. In the United States, most businesses are either a sole proprietorship
or a general partnership. Neither a sole proprietorship, nor a general partnership, is a business
entity, and as such they should never be used to operate a business or conduct any sort of for-
profit endeavor, because they provide zero asset protection benefits. In other words, if a sole
proprietorship or general partnership is sued and the business does not have sufficient assets to
pay a judgment, the owner or owners are personally liable for paying the debt and their personal
assets can be seized.

Fifth, you have to be proactive. What does this mean? You can’t put into place an asset
protection system after you’ve been sued. Unfortunately, too many times people only think
about how to protect their assets when it’s too late.

Next, let’s discuss corporations. A corporation is an entity with a legal existence that is separate
and distinct from its owners (shareholders). Additionally, it is considered and treated as a
separate "person" for tax purposes. A corporation is generally in existence perpetually until
either affirmative action is taken to dissolve the corporation or until the corporation is dissolved
by operation of law for failure to properly maintain its existence (i.e., by failing to file annual
reports or take other statutorily required actions).

When we talk about the asset protection benefits of a corporation, generally speaking, since a
corporation is a legal “person” separate and distinct from its owners, any debts or liabilities of
the corporation belong only to the corporation. Because of the asset protection afforded a
corporation, it is a popular choice for businesses.

The next type of business entity we’ll discuss is a limited liability company, or LLC. Like a
corporation, an LLC is a “person” in the eyes of the law, and as such, the LLC is responsible for
its own debts and obligations. In most states, the LLC has fewer rules regarding its formation and
maintenance than do corporations, which makes LLCs popular with many businesses.

The third and final business entity we’ll discuss is the limited partnership, or LP. Like a general
partnership, a limited partnership has multiple owners, yet not all of the owners are responsible
for the debts and obligations of the company. These partners are called “limited partners,” and
while they have no personal liability, they also do not have a voice in the operation of the
company. By contrast, the management of the company is left up to one or more “general
partners.” However, the general partners CAN be held personally liable for any of the debts and
obligations of the company, such as a lawsuit. However, selecting a corporation, rather than an
individual, to serve as a general partner, can easily cure this exposure. LPs are especially popular
for businesses that are established by an individual who needs to attract investors but does not
want to run the risk of losing control of the company.

Before moving on from our discussion of business entities, we need to briefly discuss business
insurance. Many home based entrepreneurs choose to protect themselves from lawsuits by
purchasing insurance rather than establishing business entities. While insurance is always a good
thing to have, it should never make up one’s entire asset protection strategy for two reasons.
First, a policy will typically only cover certain types of “events.” Usually, in the case of damages
that result from an intentional act or failure to act, or in the case of punitive damages, most
policies won’t pay you a dime. Secondly, every insurance policy has a limit. Even if a judgment
is awarded against your business and your insurance company agrees to pay, it must only do so
up to the policy limit. The entire amount of a judgment, which is in excess of the policy limit,
will still be your responsibility.

Finally, the key to having a secure asset protection structure is to realize that it is a lifelong
process. Whatever type of strategy you choose, you can’t just put it into place and then sit back
and relax forever. It’s important to realize that circumstances change, both in your personal
situation and in the law, and for these reasons you should always keep in mind that you may
need to tweak your strategy as time goes on.

Tax Reduction Strategies

One of the greatest threats to an individual’s hard-earned assets - and his ability to save money -
is taxes. In fact, according to many estimates, Americans spend more money each year on food,
clothing, and housing combined. Despite this fact, most people fail to undertake any tax planning
toward reducing their tax bill. Unfortunately, tax planning is something that most people think
they either don’t need or will never be able to understand. In truth, neither of these
misconceptions is true. In this chapter, we will discuss the problems that taxes pose to
individuals and how they prevent you from saving money.
Tax planning is the key to reducing or minimizing your income tax liability. What is tax
planning? Tax planning means to avail oneself of the exemptions, deductions, credits, and other
“loopholes” contained in the Internal Revenue Service Tax Code. Tax planning is a process, not
an event, and therefore it must be continual. No matter how competent your tax advisor is, in
most cases it is impossible to go back and "make it all better" after a transaction has occurred. In
addition, there are several non-revocable elections that must be made by a certain date and once
that date is passed, you cannot retroactively correct any mistakes or omissions. Accordingly, the
time to educate oneself on the ways to reduce your personal tax bill and to implement your own
tax planning is NOW!

Before getting into the basics of tax planning, every reader needs to identify and understand the
difference between tax planning and tax evasion. “Tax planning,” as we defined earlier, occurs
when one takes advantage of the IRS Code to legally reduce his or her tax bill. By contrast, “tax
evasion” occurs when an individual avoids paying taxes either by failing to file a tax return or by
filing a fraudulent return. Make no mistake: Tax planning is legal. Tax evasion is illegal.

Are you overpaying your taxes?

The reason why taxes present the largest obstacle to one’s ability to save money is because most
people over-pay their tax bill. In this regard, it might not surprise you to know that the IRS is not
going to call you after you’ve filed your return to tell you that you’ve paid them too much. Why
do most people overpay when it comes to taxes? There are two reasons: Fear and a lack of
knowledge.

First, let’s take a look at how fear causes most people to pay too much in taxes. When it comes to
the IRS, we’ve all heard plenty of horror stories. As a result, many people are simply afraid to
aggressively take advantage of the exemptions, deductions, credits, etc. in an attempt to lower
their tax bill. Fortunately, the United States Supreme Court can alleviate those fears. In Gregory
v. Helvering, 293 U.S. 465 (1935), the Court held that taxpayers have the right to use the Tax
Code to lower the amount owed in Federal income taxes. Justice George Sutherland, writing for
the majority, held:

The legal right of a taxpayer to decrease the amount of what otherwise would be his [or her]
taxes, or altogether avoid them, by means which the law permits, cannot be doubted.

Accordingly, no one should be worried about taking advantage of the provisions of the Tax Code
that can lower his or her tax bill.

Now let’s look at the second reason why most people overpay their tax bill, a lack of knowledge.
It might not surprise you to know that the IRS Tax Code is one of the largest works ever written
and, in my opinion, the most complicated and confusing. As a result, most laypeople have never
taken the time to educate themselves on the many ways their tax bill can be reduced. Instead
most laypeople rely upon the media and/or their CPA to explain to them how they can legally
reduce their taxes. Still, the problem remains that many so-called “tax experts” are not fully
indoctrinated in the Tax Code, and even when they are, their ability to explain the benefits of the
Tax Code to ordinary laypeople in simple terms is lacking.
As we said earlier, the IRS is never going to help you lower your tax bill. And while there are tax
professionals out there who can give you such help, they probably aren’t going to take the time
to help you understand all the ways in which you can reduce your annual tax burden. Even if
they do, they will never be as motivated as you are to reduce what you pay in taxes. As a result,
you need to learn on your own how you can reduce your tax burden. Fortunately, this chapter
will explain the basics of the Tax Code and provide you with an introduction on how it can be
used by everyone to lower the amount of their money that is lost to taxes every year.

Understanding Income

Any discussion on how to legally reduce one’s tax burden through proper tax planning must
begin with income. As you can imagine, there are many different types of income according to
the Tax Code, and each type of income is taxed in a different way. There are seven different
types of income. Starting with the least taxed income and going to the greatest, these seven
income types are as follows:

1. Tax free income: Income with no tax is better than the alternative.

2. Deferred income: This is the same thing as an interest free loan. It’s difficult to pass up free
money.

3. Long term capital gains: LTCG are taxed at lower rates and are not subject to FICA and
Medicare taxes. They are also not taxed until the investment is sold.

4. Rents and Royalties: These are taxed at regular income tax rates and not subject to FICA and
Medicare taxes. However, expenses can be deducted from these to reach the taxable amount.

5. Short term capital gains: STCG are taxes at ordinary income rates and are not subject to FICA
and Medicare taxes. They are more attractive than interest and dividends because the option is
there to hold them for a long-term period of time.

6. Interest and Dividends: These are taxed at regular income tax rates and not subject to FICA
and Medicare taxes.

7. Earned Income: Taxed at regular income tax rates and subject to FICA and Medicare taxes.

The second step to lowering one’s income taxes is to understand how taxes are withheld from
your employer. If you’ve ever received a paycheck, then you know that when you work and
receive that paycheck, your employer holds taxes out of your check. While everyone knows that
taxes are held out, my guess is that you probably don’t know exactly what types of taxes are held
out and at what rates. If you analyze the taxes that come out of each of your paychecks, you will
generally see four types:

1) Federal Income Tax Withholdings

3) Medicare Withholdings

4) State Income Tax Withholdings

First, let’s look at Federal income taxes. These taxes are withheld from an employee’s paycheck
based upon how he or she filled out the W-4 form given to them when they were first hired.
Currently Federal individual tax rates range from zero percent all the way up to thirty-five
percent! The factors considered by the IRS in calculating your tax rate include, but are not
limited to, your marital status, number of dependents, and itemized deductions (mortgage
interest, state and local taxes, charitable contributions, etc.).

The second type of withholding tax is the Medicare tax. This tax is currently held out of
everyone’s paycheck at the rate of 1.45%. Every dollar you earn is subject to Medicare tax. This
is not the case with the Social Security tax, which is capped at a certain earnings threshold. Your
employer is required to match the Medicare tax withholdings from each of your paychecks. Thus
individuals who are self-employed must pay 2.9% of Medicare tax on their entire earnings.

The third type of Federal withholding tax is supposedly to help you in retirement. Of course,
we’re talking about the Social Security tax, which is currently held out of your paycheck at the
rate of 6.2% on your first $97,500 in wages. Like the Medicare tax, one’s employer has to match
the amount withheld, dollar for dollar. Therefore, if you own your own business, you must pay
12.4% in Social Security tax.

You should be aware of the fact that Medicare taxes and Social Security taxes together are
referred to as FICA. Combined, these taxes equate to 7.65% for both the individual and his or her
employer, which equates to a tax of 15.3% for self-employed individuals. This is referred to as
the self-employment tax.

Finally, let’s not forget about state income taxes. For states that collect income taxes, the rates
can range anywhere from 3% (Illinois) to 9.5% (Vermont). Of course, not all states assess an
income tax. These states are Alaska, Florida, Nevada, South Dakota, Texas, Washington and
Wyoming.

What sort of taxpayer are you?

The third step in tax planning is to identify the types of taxpayers. That’s right, even though we
have discussed different types of income and different types of taxes, we need to understand that
not all taxpayers are treated the same. Identifying the different types of taxpayers (and
determining what type of taxpayer you are) is where a lot of people make mistakes when it
comes to tax planning. This is because knowing what type of taxpayer you are is a personal
element in the tax planning equation. In other words, anyone can recite for you all the different
ways in which income is taxed, and at what rates, or tell you all about different taxes, but this
information will not provide much benefit, i.e. will not allow you to substantially save money,
unless you look at the information relation to the type of taxpayer you are.
With some exceptions, there are basically two types of taxpayers - businesses and individuals.
Whenever possible, you want to be taxed as a business rather than as an individual. In fact, it has
been said many times that the greatest tax shelter in the world is to own one’s own business. This
is because the ways to legally reduce the tax bill of a business are VASTLY more numerous than
the ways to legally reduce one’s individual tax bill.

Estate Planning

Finally, let’s discuss the dangers posed by probate and estate taxes. In order to protect against
these threats, we must discuss estate planning. For many people, estate planning means the
drafting of a will to determine who will receive your assets upon your death. Most of the people I
meet think that estate planning is only for the ultra-wealthy. While a will may certainly be part of
it, unfortunately, it’s not necessarily that simple. There is a lot more to the process and you don’t
have to be amongst the rich and wealthy to desperately need estate planning.

Estate planning essentially refers to the area of analyzing an estate owner’s personal affairs and
assets, and developing a plan for the ways in which the owner’s wishes for distributing those
assets and providing for loved ones can best be met. For our purposes, I want to give you a
quick, simple definition of exactly what estate planning is all about.

Estate planning is about answering the questions of who, what, where, when, why and how. It’s
as simple as that. These are the questions that you need to answer in order to determine exactly
what any subject is all about, and estate planning is no exception. Ask yourself these questions:

Who are your heirs?

What assets will you leave?

Where can you go to get help with your estate plan?

When should your assets be passed?

Why do you need a formal estate plan?

How can you accomplish your estate planning goals?

Now we all know that one of the greatest obstacles to preserving one’s wealth is taxes. We know
that we are subject to taxes while we are alive, but to add insult to injury, some of the highest
taxes many Americans face are actually those that our estates are subject to after death. Yes, your
heirs may owe taxes on your estate after you are dead! Doesn’t this basically defeat the purpose
of accumulating assets in your lifetime, just so the taxes can be passed onto your loved ones or
your preferred causes? Absolutely. This is a major hurdle that must be overcome in order to have
all you’ve worked so hard to acquire be distributed in the way that you wish. Basically, the
government, along with the various laws it has passed to control the distribution of wealth, poses
the single greatest threat to your heirs. This makes it all the sweeter when you learn the closely
guarded secrets of the ultra-wealthy and implement those into a well-structured estate plan to
legally avoid these pitfalls.

In a nutshell, this is as brief a definition as I can possibly give you. If you can get a handle on
how you need to answer these questions, the estate planning process can be as simple and
painless as possible

When it comes to estate planning, probably the most frequent question I hear is “Who needs an
estate plan?” I am often told, “I don’t own that much so I don’t really NEED an estate plan.”
One of the most common misconceptions when it comes to estate planning is that someone
doesn’t have enough assets to worry about such matters. Let me state this very plainly:
Everyone should have an estate plan!!!! Why? Simply stated, you might have accumulated
more assets than you think, and you might have children or dependents that rely on your support,
so you should be able to direct those assets to the beneficiaries of your choice and for the care of
your dependents as you see fit.

Anyone who owns assets has an estate, period. Whether your estate fills a 50-room mansion or a
shopping cart, everyone needs to have estate planning. Upon a person’s death, their assets, by
law, must be properly distributed. Likewise, the manner in which you want your children or
other dependents to be provided for must be outlined in a properly established and operated
estate plan. Exactly which assets are distributed, and to whom, depends on the estate plan he or
she has in place. Without proper planning, a court could determine the distribution of their assets
and the care of their dependents in accordance with state law, which might not fit the wishes of
the deceased.

Another misconception about estate planning is that it is only necessary for people who are in
danger of avoiding estate taxes. It is true that many estates - even modest-sized ones - will
remain vulnerable to state inheritance and estate taxes. Yet the main reasons why all estates need
some degree of estate planning include:

Making sure your assets go where you want them to go

Controlling assets while you are alive but incapacitated

Controlling assets after death

Minimizing the emotional and financial burden on your heirs

Minimizing feuding over your estate among your heirs

Increasing the amount available for charitable donations

Avoiding the cost and delay of probate

Providing provisions for a guardian of minor children or for elder care

Like most things in life, our regard for estate planning changes as our life experiences change.
Most of us tend to view estate planning differently based upon our age and/or life stage. When
we are in college or are a young adult, we generally think very little about estate planning, if at
all. At this stage in our lives we typically have very little in the way of assets and are usually not
married and/or have children. Therefore, our disregard for estate planning makes sense. We are
often completely focused on getting started in our careers, and perhaps moving to new cities,
establishing new marriages, or even beginning to foray into business. Yet as we begin to put
down roots, be it in a career, our own small business, or even starting a family, estate planning
will become more important to us.

Once we realize that the need for estate planning is an important first step, we also should realize
that as we grow in experience and assets, our strategies for estate planning should change over
time. As we enter this stage, our greatest concern should be providing for our young families in
the event of our death. Since we might not necessarily have a lot of assets, we should think about
life insurance, which is often rather inexpensive way to provide for our family when we’re gone.
Death is not a scenario we want to think about, especially as vibrant young adults, but it is part of
our responsibility as parents, or even as home based business owners, to provide for those who
depend on us with a comprehensive estate plan that continues on after our passing.

As we watch our children (and hopefully our assets) grow, the same reasons for estate planning
continue to be our concern. At this point, you may or may not have added several philanthropic
causes to your original list of beneficiaries, such as an alma mater, church or charities, so your
estate plan might have become more complex that ever.

When you reach your golden years, not only will you have all of the previously discussed issues
to include in your estate plan, but you might also want to include your wishes for your own care
if you are incapacitated and unable to care for yourself, or your desires for your funeral or
internment if you pass. Whether we want to think about these things, dealing with them in the
present is the only way to ensure they are adhered to in the future.

Simply put, no matter what stage in our life we may be in, once you have implemented your
estate plan strategy, your work is by no means done. It is recommended that every few years you
review your estate plan to be sure that it still accurately reflects your wishes. Lives and wishes
can change on an annual basis, so it only stands to reason that as time goes on, your assets can
grow and change. Your family might increase or decrease in numbers because of births, deaths,
or through divorce, so your estate plan will need to be changed from time-to-time as
circumstances change. Your estate plan should be considered an extension of your life. The key
is that now you have a say in what goes on. Tomorrow you might not.

Learning to TRUST Yourself

Most of us are familiar with the most popular form of estate planning, the will. Wills are simply
written directives that outline the way you wish for the courts to distribute your assets and
provide for your dependents after your death. Sounds great, and most of us have one, but did you
realize that a will is basically a SUGGESTION to the courts of how you want your assets
distributed? Wills must still go through the court system in an expensive and time-consuming
process called probate where the court decides if your directives should be followed. We’ll
discuss probate and why you want to avoid it a bit further in the next section. So if a will doesn’t
accomplish our primary estate planning goals, what will? Well, you need to learn to “trust”
yourself.

One of the most common tools for estate planning, besides a will, however, is the trust. What is a
trust? Simply stated, a trust, any type of trust, is simply a contract whereby one person (the
Trustor or Settlor) hands over property to another person (the Trustee) with instructions to hold
and manage the property for the benefit of a third party (the Beneficiary). As we’ll discuss in this
chapter, there are many types of trusts that can be used for estate planning.

A Revocable Living Trust is an arrangement by which an individual or a couple (also called the
“Trustor(s)”) transfer legal title of assets from their names to the Trustee or Trustees of the Trust.
A Trustee is designated to manage the Trust property according to the terms outlined in the Trust
document. In most cases, the Trustor(s) often act as the initial Trustee(s) of the Trust and,
therefore, maintain complete control of the Trust during their lifetime. Sounds confusing, but it
essentially means that the same person who establishes the trust, the “Trustor,” is also the person
who executes, or carries out the trust terms as the Trustee. The Trustor(s) can thus continue to
buy, sell, borrow or transfer assets at any time. The terms of the Trust, including the disposition
of assets at death and/or the persons named as Trustees, may be changed or revoked by the
Trustor(s) as they see fit during their joint lifetimes, so long as they are still considered
competent to do so. So what is the benefit of the Revocable Living Trust?

Avoiding probate is the biggest benefit for most of us of a Revocable Living Trust. What does
avoiding probate mean? We’ll discuss that next, but if you think that creating and maintaining
your living trust sounded complex and expensive, just wait until you see what probate could cost
you! The second benefit of having a Revocable Living Trust is that it can also help you to
reduce, or in some instances avoid, estate taxes.

Where There’s a Will, There’s Probate

I have already mentioned that the single most important estate-planning tool at your disposal is
the living trust. Without a living trust, your estate, including personal assets, business interests,
life insurance death proceeds, and government benefits, will have to go through probate. This
now begs the question, what is probate and why would I want my estate to avoid it? Well,
probate is the legal process used to wind up an individual’s legal and financial affairs after his or
her passing. Assets and liabilities of the estate are identified. Debts are paid. Taxes are filed.
Administrative (attorney) fees are paid. The remaining assets, if any, are distributed to the
beneficiaries of the estate as provided by a will, or without a will, in accordance with state law.

On the surface, probate sounds like a nice, tidy process, and conceptually it is. However, once a
couple of attorneys, a few accountants, and our rapid moving court system get involved, this
process becomes a nightmare. If your estate has to be probated, it can be drained by up to 10% of
its value by administrative expenses, legal fees, debts, court costs and so forth, leaving your
beneficiaries with much less than what you intended them to receive.
Furthermore, if your estate has to be probated, the court, not you, determines the final
distribution of your estate and the guardianship of any dependents, whether you have a will or
not. Even worse, your heirs will not receive any of your assets until they have been probated,
which takes many, many months, perhaps even years, putting your loved ones in a financial
strain. Just when you think it can’t get worse, all your probated estates become a matter of public
record, meaning your (or your heirs’) creditors, friends, neighbors, even ex-spouses can find out
exactly how much you had in assets, and use the probate process to “contest the will” in order to
try to get their hands on those assets.

In addition to the burden and expense of probate, your estate can be further depleted by estate
taxes, property taxes, income taxes, accounting fees, and more legal fees if you have not
executed a living trust. In short, all of your estate planning goals and final wishes depend upon
the living trust.

Where There’s a Will, There are Estate Taxes

As already mentioned, the second benefit to having a Revocable Living Trust is that it can help
you reduce, or avoid entirely, estate taxes. The estate tax is a tax levied by the federal
government against your right to pass on your wealth to your heirs and beneficiaries. Even
though you have already been taxed on income as you earned it, you could also be taxed on your
any assets you leave your loved ones. When it comes to taxes, this one is probably everyone’s
least favorite.

Under current tax law, any estate that is valued at over two million dollars is subject to estate
taxes. These taxes can be as high as almost half the value of the estate! The good news is that in
2009 the threshold amount for invoking the estate tax increased to three and a half million
dollars, and in 2010 the estate tax will be repealed. However, this relief is only temporary,
because in 2011 the estate tax threshold is only one million dollars.

So how does a Revocable Living Trust help you avoid or reduce estate taxes? Simply put, the
Revocable Living Trust allows for two independent (and smaller) estates for a husband and wife
instead of one large marital estate for the purposes of determining their estate tax liability. In
other words, instead of having one large marital estate, a Revocable Living Trust allows for the
parties to have two separate estates that are each calculated independently of the other in order to
determine if they are over the estate tax threshold.

Putting Your Estate Plan Into Action

Once you have defined the goals and objectives of your estate plan, a detailed design or blueprint
should be drawn up. There are basically five successive steps that are crucial to creating and
maintaining your estate plan:
1. Documentation - You and your financial professional should assemble all of the pertinent
facts about your material resources and assets, and the personal and financial circumstances of
each member of the family or potential heirs. In doing this, you should take into account both
past and potential behavior, family changes (marriage, births, divorce, deaths, etc.), financial
status and responsibility, etc. as objectively as possible.

2. Analysis - Analyze these facts and compare them against your goals and objectives.

3. Formulation - Formulate potential plans, then play devil’s advocate to test them and select
the one that most helps you to reach your estate planning goals.

4. Implementation - Implement your estate plan. No plan can be successful unless it is

5. Review and Revision - Perform periodic reviews and revise the estate plan every 3-5 years,
on average, or more or less frequently as your life changes.

DISCLAIMER
This report is for information purposes only and does not take into account the
investment objectives, financial situation or particular needs of any particular
recipient. The information contained herein does not constitute the provision of
investment advice and is not intended as an offer or solicitation with respect to the
purchase or sale of any of the financial instruments mentioned in this report and will
not form the basis or a part of any contract or commitment whatsoever. This report is
not directed to, or intended for distribution to or use by, any person or entity who is a
citizen or resident of or located in any state, country or other jurisdiction where such
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