NYU Estate Planning Midterm Exam
Walter A. White (age 57) & his 2nd spouse Skylar (age 48) , have just retained us to help design their estate plan.
By way of background, Walter is a brilliant chemist. Formerly a professor, he has been designing and protecting his intellectual property rights with respect to certain blue crystals that he developed, which properly ingested, really help those with mood disorders. The product works beautifully and in 2012 he started selling it to PharmaCartel. He owns his 50% of the company Crystal Right, LLC with his partner Jesse (age 24). Sales are really starting to grow.
As a hedge, with his new found wealth, he bought a car wash called Brite Blue, LLC for his wife and son Flynn (age 18) who suffers from cerebral palsy. Together they manage the business on a daily basis. Until recently, no one knew that Jesse was actually Walter's son from his first marriage - but it's a fact. Naturally Skylar and Flynn were stunned, but they're trying to be understanding and be supportive. Walter feels an obligation to provide for Jesse too.
The couple reside in NYC, and vacation to their home in New Mexico. While celebrating his birthday, Skylar was singing happy birthday and suddenly Walter fainted. After many tests, he was diagnosed with lung cancer. Nervous about the future, and worried about cash flow in the event Walter dies, they ask that you provide a detailed memo answering the questions below.
The couples assets include the following:
|
Asset
|
Title
|
Value\Equity
|
% Growth rate
|
Action plan
|
|
NYC Condo
|
Walter
|
$1,800,000
|
4
|
|
|
ABQ Villa
|
TE
|
$ 600,000
|
4
|
|
|
IMA
|
JTWROS
|
$2,200,000
|
6
|
|
|
Universal Life Insurance
|
Walter to Skylar
|
$2,000,000 cv $200,000
|
6
|
|
|
TIAA-Creef 403b
|
Walter to Skylar
|
$ 400,000
|
4
|
|
|
50% interest in Crystal Right, LLC
|
Walter
|
$ 5,000,000
|
10
|
|
Skylar not only manages Brite Blue, but she runs her families private foundation in Oslo, Norway. She's there quite often, and always travels with her four-legged companion Tuco, a Mexican Chihuahua. Flynn begins his Freshman year at NYU pursuing a degree in Psychology.
They have asked:
1. What additional questions do you have?
2. What documents do you need to review?
3. What estate planning documents will they need?
4. What's their current estate tax liability?
5. What estate tax planning techniques should they consider?
6. As we progress, what is the role of their :
a. accountant
b. banker
c. money manager
d. life insurance professional
e. financial planner
f. estate planner.