Asset Protection for Physician
Jan 01, 2013OUTCOME: 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.
A married physician with three children owned the following assets: Residence $500,000 Retirement Plan $1,800,000 Brokerage Accounts $3,000,000 Family Farm $500,000 Life Insurance $1,000,000 ... Miscellanceous Assets $200,000 Total Estate $7,000,000 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.
