Case Information

Diana and Luis Johnson live in New Mexico and have been married for $35$ years. Diana is

currently $56$ and Luis is currently $60.$ They have three children, Jeffery $($age $24),$ Miranda $($age

$,$ and Melody $($age $28).$ Melody, the couple's eldest daughter, passed away from cancer this

past year. She left behind two daughters, Brooklyn $($age $6)$ and Emily $($age $4).$ Melody was a

single mother, so Diana and Luis became the legal guardians of Brooklyn and Emily. They

currently have no other grandchildren.

Luis was recently diagnosed with a heart condition. This, in addition to Melody's death, has

prompted the couple to seek advice related to their estate as well as discuss some questions that

they have.

The couple owns the following major assets:

Cash and cash equivalents is held in a bank account with Diana named as the beneficiary.

The residence was purchased before Luis and Diana married. It is titled JTWROS.

The brokerage account lists Diana as the primary beneficiary.

The life insurance policy is valued at $$600,000.$ The beneficiary is Luis's mother $-$ Mary

who passed away $2$ years ago. The policy has not been updated since.

The retirement account lists Diana as the primary beneficiary.

The boat is as titled tenancy in common with Luis contributing $60\%$ of the $$500,000$

value and Jeffery contributing $40\%.$

Cash and cash equivalents are held in a bank account with Luis named as the beneficiary.

The jewelry is owned solely by Diana.

The farm was inherited by Diana from her parents after Diana married.

The brokerage account lists Luis as the primary beneficiary.

Diana owns $20\%$ of a business she shares with her good friend, Pam. Her portion of the

business is valued at $$800,000.$

Life insurance policy $1$ is valued at $$400,000.$ The beneficiary is Diana's friend Pam.

Life insurance policy $2$ is valued at $$650,000.$ The beneficiary is Luis.

The Johnson's are concerned about the following points and wish for your guidance. Please

write a report which fully addresses these concerns.

Both Diana and Luis would like to know the value of their probate estate.

Are there any assets that should have updated beneficiaries?

Both Luis and Diana assume that Luis will pass away before Diana. They are concerned

about the potential estate tax. They would like to know what their current tax liability is in

the event that they pass in $2024.$

The Johnson's would like to know how to reduce their tax liability. They are completely

new to this process and would like to know their options. They are open to establishing

trusts and making transfers to their heirs while they are still living.

The Johnson's are concerned about what will happen to Brooklyn and Emily should

something happen to them. What options do they have to protect Brooklyn and Emily?

Diana and Luis are considering how they should split their inheritance. They want to be

fair, but they are unsure of how to do that now that Melody has passed away. Additionally,

they are interested in donating a portion of their wealth to a charity aimed at eliminating

cancer. What are their options in splitting their inheritance? How would a charitable

donation impact their estate plan?

Currently, the Johnsons only have a Will. What additional estate planning documents

should they have? Should they update their will? If so$,$ how?