Estate Planning

Executive Summary of Plan

* Revocable Life Trust – used to manage assets and transfer onto children’s subtrusts

* Family Limited Partnership – funded with Rufus Repair Shop and Stock

* Creation of Charitable Remainder Trust – funded with Rufus’ IRA

* Funding of Irrevocable Life Insurance Trust – funded with annuity stream from CRT

* Retitling of Property and Beneficiaries – 50/50 for RLT

* Taking Care of Sandy and Bob Responsibly – Designate any property transferred to Sandy and Bob to their respective Spendthrift and Special Needs subtrusts

* Electing Deceased Spouse Unused Exemption – Having Xi elect any unused exemption as her own

* Creation of Will – ensure that all loose ends are tied up; focus is on Xi and how her will changes do to the death of Rufus; property will transfer to subtrusts and children equally

Assumptions

For the first scenario, we assumed some facts in order to execute the plan and show how terrible having no plan really is. Below are the facts that we assumed:

* Xi Liu owns the second automobile

* ALL tenants in common share ownership 50/50

* No charity beneficiaries were/are named in the first scenario

* If wife was to receive property from probate administrator, wife would be eligible for the unlimited marital deduction; for our purposes, we assume she does not elect this deduction

* We also assume that after Rufus passes, Xi Liu was selected by the court to attain all of his ownership (in reality we know that the children would receive property as well, but for simplistic reasons we ignored that development)

* Life insurance paid out to Xi Liu becomes cash that is considered her property

* Money transferred on to children in equal amounts

Our Plan

Family Limited Partnership

Assuming Rufus and Xi have not gifted in the past, this would be a perfect opportunity to use gift taxing and property transferring. We are funding the FLP with their repair shop, that way there is...