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Married Estate Planning Case Study

Sometimes it is helpful to understand estate planning techniques in the form of a case study.

Let’s take a hypothetical situation of a married couple of Jim and Jane Smith.  Jim is 72 and Jane is 68.  Both are retired at this point, they have 3 adult children Abby, 45, Bob, 43, and Chad, 38.  Abby and Bob are married with children, Chad is recently divorced with children.  They have $250,000 in retirement accounts, a primary residence in Brighton, Michigan and a second property up in Harbor Springs, plus another $500,000 in investments.

Married Estate Planning Goals

They’re goals for their planning was to protect against long-term care costs and ensure whatever they leave to the children are protected against divorce and creditor actions.  Currently, they have a 10 year old estate plan, involving a simple revocable living trust leaving everything outright to their kids because they are “of-age”.

Estate Planning Audit

When they came into our office, we went through a 15 point Estate Planning Audit, figuring out exactly what they had and where they wanted to go.  The estate planning audit is a tool we use with clients to get clarity on their planning objectives and current state of their estate plan.

Their estate planning audit revealed that there were some severe holes when it came to planning for long-term care and protections for their children and grand children.

Strategies for Married Couple Estate Planning

As a result of their estate planning audit as part of their vision meeting, we held a design meeting where we designed a comprehensive state planning utilizing a revocable living trust and an asset protection trust.  We moved their non-qualified accounts into their asset protection trust to protect against long-term care costs, with their qualified accounts being used as income for them and named to their revocable living trusts to protect their children against divorce, law suit or creditor action.  We then deed both their primary residence as well as their second property to the asset protection trust, so that both would be protected against nursing home or medicaid spend down.

Both the asset protection trust and the revocable living trust would have creditor protection for their children, so that if they were to get divorced, half the assets would not be going to the ex-spouse.

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