Estate Planning Case Study - Credit Shelter Trust Joe ( 61) and Mary (60) Brown Joes owns Modern Machine Company, which he started back in 1983, right out of engineering school. Over the years the company has grown as a supplier of aircraft parts to multiple customers, including Boeing, Lockheed, Rolls Royce, and Airbus. Currently, the company spins off nearly $1MM a year in profits, with Joe taking a $350,000 annual salary. A recent valuation put the take out value of MM Co at approximately 1.5X annual sales or $17.5MM. Mary has been on the books at MM Co as a bookkeeper since the business's early days. She currently draws $75,000 a year in salary. Joe has $1, 450,000 in his 401(k), while Mary has approximately $700,000. Their daughter Chantal, also an engineer, is a manager at the company now, and looks to succeed her father as owner of MM Co. MM Co is an S corp with only two shareholders Joe (95%) and Mary(5%)

Browns own two homes, their primary residence, valued at $600,000 with no mortgage and a vacation property which has appreciated greatly over the twenty years the Browns have owned it and is now valued at $1,500,000. Joe has life insurance in his name with a $2,000,000 death benefit and 225,000 cash value. Paid-up whole life. Mary has $1,000,000 in paid-up whole life, with a cash value of $145,000. In addition to their 401Ks, Joe and Mary have a JTWROS brokerage account valued at $1,600,000. Bank Savings = $50K, bank checking = $30 K. All in joint name. Joe and Mary come to you for some estate planning. They think they have an estate tax issue. The eventual transfer of MM Co to Chantal is being discussed as well, but disregard any business sales issues here and focus on how Joe and Marys estate plan ought be structured right now!

Look at the title of this case study; what do you think Joe and Mary need? Are there any changes to the titling of their assets that needs to be done?