Case Studies

The following are examples of actual estate planning cases handled by Patterson Bray PLLC and the results that were accomplished. Although the facts are from actual cases, no actual names are used to maintain the privacy of our clients. Further, we craft each estate plan based on the specific circumstances of our clients, which may or may not be applicable to your situation, and you should always seek legal counsel before implementing any particular planning strategy.

CASE STUDY 1

Estate Planning and Asset Protection Planning for the Physician

A married physician with three children owned the following assets:

The physician’s primary objectives were to (1) protect his assets from future judgment creditors, (2) protect the inheritance of his children and other descendants from creditors and predators, (3) avoid any Probate Court administration, (4) “Stretch-Out” the distributions from his retirement plan after death and the death of his spouse and (5) save as much death tax as possible.

Before planning, at the death of the physician and his spouse, the estate would have owed more than $1,500,000 in death taxes. In addition, the brokerage accounts and family farm would have been subject to the claims of future judgment creditors.

We developed a Revocable Living Trust-centered estate plan to avoid a Probate Court administration in the event of incapacity or death which took advantage of both the physician’s and his spouse’s federal and state death tax exemptions. The life insurance policy was transferred to an Irrevocable Life Insurance Trust so that the death benefit will not be included in the taxable estate.

Two Wyoming Close Limited Liability Companies were created, one for the brokerage accounts and one for the family farm, to potentially protect the assets from future judgment creditors and to provide an orderly system of management. Also, valuation discounts for estate and gift tax purposes will apply to the membership interest.

At the death of the physician and his spouse, Asset and Divorce Protection Trusts will be established for the inheritance of the children and Dynasty Planning established for other descendants to attempt to protect the inheritance from creditors and predators.

Finally, a Retirement Benefits Trust was established so that each of the children’s life expectancies will be used to determine the minimum distributions from the physician’s retirement plan after the death of the physician and his spouse.

At the time of planning, the new estate plan eliminated the death taxes that would have been due at the death of the physician and his spouse, a savings of more than $1,500,000.

CASE STUDY 2

Estate Planning, Asset Protection Planning and Business Succession Planning for the Small Business Owner

A married small business owner with two children owned the following assets:

The business owner’s primary objectives were to (1) transfer the value and benefits of the business equally to his children but to transfer the control of the business to only one child who was involved in the business, (2) protect his assets from future judgment creditors, including liabilities arising from the business real estate, (3) protect the inheritance of his children and other descendants from creditors and predators, (4) avoid any Probate Court administration and (5) save as much death tax as possible.

Before planning, at the death of the business owner and his spouse, the estate would have owed more than $1,200,000 in death taxes. In addition, the business interest, business real estate and brokerage accounts would have been subject to the claims of future judgment creditors.

We developed a Revocable Living Trust-centered estate plan to avoid a Probate Court administration in the event of incapacity or death which took advantage of both the business owner’s and his spouse’s federal and state death tax exemptions. The life insurance policy was transferred to an Irrevocable Life Insurance Trust so that the death benefit will not be included in the taxable estate.

Three Wyoming Close Limited Liability Companies were created, one for the business interest, one for the business real estate and one for the brokerage accounts. The membership interest of each Limited Liability Company (LLC) were directed to be distributed equally to trust shares for each child. However, the child involved in the business was appointed manager of the LLC owning the business interest so that, although the siblings shared equally in value, the child serving as manager controlled the business. By having the business real estate owned by a LLC, the business owner’s personal assets may be protected from liabilities arising on the property. The brokerage accounts may also be protected from any future judgment creditors. Valuation discounts for estate and gift tax purposes will apply to the membership interest.

Finally, at the death of the business owner and his spouse, Asset and Divorce Protection Trusts will be established for the inheritance of the children and Dynasty Planning established for other descendants to attempt to protect the inheritance from creditors and predators.

The new estate plan provided an orderly business succession plan. At the time of planning, the new estate plan eliminated the death taxes that would have been due at the death of the business owner and his spouse, a savings of more than $1,200,000.