Accident Attorney

Julie asked:


In your data session you find out that Rich is age 62, and Ruby is age 57. They have been
married for 30 years and live at 4 Glendale Avenue, Wayne, NJ. They have a son, Alvin age26, who is a personal injury attorney for a big law firm in Newark, NJ.

Alvin is married to Arlene and they have two children, James age 6, and Jenny age 5. Both children attend a very exclusive and expensive private school. They also have a daughter, Karen, age 21, who is not married. She is still in school working on her degree in bio-gastric anthropology and expects to continue and get her doctorate.

Rich believes that the world just doesn’t have enough bio-gastric anthropologist, and would be happy to pay for Karen to finish her education which is estimated to take about 5 more years if he can pay for it in an efficient way. Both Alvin and Karen live in NJ.

Rich graduated from Podunk Polytechnical University with a degree in civil engineering
and is the 100% owner (and 100% voting member) of Macadam Company which is a
Limited Liability Company that specializes in building and repairing roads, parking lots and other infrastructure. The company has 20 employees and an annual net income is about $750,000. This is after Rich takes an annual salary of $200,000. Rich feels that the
company is worth about $6,000,000, and expects it to grow by about 10 to 15% over the
next 6 to 8 years after which time Rich will sell the business probably to a competitor.
Ruby is a stay at home mom.

The last copy of their wills were from 1992.

Rich’s Will provides for a Specific Bequest of $500,000 to his college alma mater. It also provides that the remaining estate will pass to the other spouse, if living, otherwise to Alvin and Karen, if living, and if either child is not living, then to the deceased child’s surviving descendants, per capita.

In your discussion during the meeting you find out that Rich feels that his Will is outdated and needs to be updated to pass his estate to Ruby and his descendants more effectively and efficiently. He also wants to make sure that Ruby has access to his estate assets should Rich die first, but also that Alvin and Karen receive their share of the estate when Ruby dies. He expresses that Ruby is a good wife and loving mother, as well as a very attractive woman who would be a “great catch” for some guy after Rich is gone.

Rich also realizes that his estate has grown significantly, and will continue to grow in the
years to come. He is not opposed to starting a gift giving program if it makes sense and
provides him and Ruby with enough resources to enjoy their remaining years and live out
their lives in comfort. Ruby is not interested in making any gifts now, but will cooperate in any gifting plan to the family or to charity that makes Rich happy.

Explain the difference between probate and non-probate assets, and calculate their probate estate for them. A calculation of the amount of federal estate taxes that will be due based on their current plan should also be provided to them.

You should also discuss revisions to the clients’ Will, if appropriate, that will pass the assets to and/or for the use of their descendants in an effective and efficient manner. Also, make recommendations as to how assets should be titled to implement the plan and whether additional documents should be put in place. Any gifting recommendations should include a discussion of the federal gift tax law and why your recommended gifting plan makes sense. You should include a strategy to provide liquidity to the estate to pay any estate taxes due. Feel free to discuss any other objectives that you think your clients should consider, and any other planning ideas that you feel are appropriate.