Joseph Martin, age 66, is the owner of Pediatric Surgical, an S corporation. The company manufactures surgical

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Joseph Martin, age 66, is the owner of Pediatric Surgical, an S corporation. The company manufactures surgical implements for pediatric surgery. He founded the company 30 years ago after working as a sales rep for another surgical implement company. At that time surgeons were using the same implements on both adults and children and he saw an opportunity to provide specialized implements for pediatric surgeries. Joseph originally had two silent partners who provided the seed capital. He bought both out over 10 years ago. The company has been very successful due to his vision and hard work. Joseph still says 'I never dreamed I'd have a business like this.'. He also owns the commercial property used by Pediatric Surgical and receives lease payments.

Joseph has been married to Hilda, age 50, for 25 years. This is his second marriage. His first wife died shortly after their third child was born. Joseph has three children from his first marriage

Joseph Martin Jr. (JJ) age 42 is married to Denise, age 40 and they have two children, Joseph Martin III (Joey) age 14 and Susie age 12. JJ is a successful investment banker who never had any interest in working at Pediatric Surgical. He and Denise have been married for 15 years. They had a rocky spot in their marriage 5 years ago and were separated but they worked it out and are happy now. JJ and Denise have a very good relationship with Joseph and Hilda.

Mary Jo Martin Kelly (MJ) age 40 is married to John Kelly age 45. They have two children, Seamus age 10 and Brandon age 8. MJ has worked at Pediatric Surgical for 16 years and wants to take over the business when Joseph retires. She is fully capable of running it today and Joseph recognizes her as his successor. She and John, a successful independent photographer, have been married for 18 years and are very happy and financially sound.

Sally Martin Cruz, age 34 is divorced with one child, Julie age 6. Julie is a Downs Syndrome child and has special needs. She is the apple of her grandparent's eyes and a very happy little girl. Sally works in IT which allows her to work from home to take care of Julie but her job history has not been steady. She has had to pass up several promotions because they would not allow her to work from home. She has no contact with her ex-husband and has sole custody of Julie. Sally leads a simple life but worries about her and Julie's future. She has an exceptionally strong relationship with both Joseph and Hilda.

Hilda Martin has one son from a college relationship when she was 20. Anthony, age 30, grew up with the Martin children but has always felt like an outsider. At one point Joseph discussed formally adopting Anthony but nothing was ever completed. He lives in California and has never had a job last longer than six months. He is a recovering drug abuser and has been 'clean' for two years. He is single but in a relationship with a divorced woman with two children. Hilda worries about his future. Joseph cares about him but wishes he would 'get his act together'. At Hilda's urging they send him a monthly stipend to keep him afloat.

Joseph and Hilda are significant financial supporters for their church. They have often thought about doing something to encourage family philanthropy but don't know where to begin.

Joseph and Hilda currently live in Colorado, a non-community property state, and want to retire to South Carolina sometime in the next five years. Their common goals are:

To be financially secure for their joint lifetimes
To have flexibility and not get 'locked in'
To have MJ take over the business
To provide education for all their grandchildren
To help Sally have a secure future for both her and Julie
To feel they have treated their children fairly, including Anthony
Hilda would like Sally to have her Jewelry
Joseph would like JJ to have both his watch collection and gun collection
To minimize taxes and the risk of creditors

They are not opposed to gifting assets as long as they understand the impact on them and the children.

Given the age difference between Joseph and Hilda, Joseph would also like to give his three children some form of inheritance at his death rather than have them wait until both he and Hilda are gone. However, he wants to feel sure Hilda is financially secure and able to do anything she wants. He also wants Hilda to feel that Anthony will have security in a safe place to live, food to eat, and access to medical care. Joseph worries about Anthony's ability to make good decisions and fears he could lose anything he is given. Neither Joseph nor Hilda are happy about his current relationship.

They currently have basic wills (executed in 1999) designed to take advantage of the lifetime exemption (A family trust created at Joseph's death for his descendants. All other assets go directly to Hilda) but no specific bequests or charitable component. Hilda's will leaves all her property to her descendants. Both have named each other as executors and trustee with Joseph's younger brother Billy (age 55) as successor executor and trustee for the estates. They do not have a prenuptial agreement.

They enjoy traveling but otherwise live, in their words, 'a simple life'. They estimate they need $300,000 (2019) of after-tax income to support their lifestyle.

What weaknesses do you see with Joseph and Hilda's current estate plan?

What estate planning documents do you recommend for Joseph and Hilda?

Explain how Joseph could use life insurance to meet some of his wishes.

Explain what kind of life insurance and how it could be used to meet his goals.

Explain what trust(s) Joseph and Hilda might consider implementing.