The faint strains of organ music, playing the funeral recessional, had barely faded. Jim and Jean sat quietly, reflecting upon the life of their good friend Tony; a life which ended suddenly and without warning at the age of 49, the victim of a heart attack suffered while playing a game of pickup basketball. Tony's wife, Liz, and three young children had been led to the long, black limousines, their spirits drained and their faces a study in anguish. Liz had learned just yesterday that Tony's independent, devil-may-care attitude that had so attracted her in their youth was going to leave them virtually penniless. He had not planned to die. After offering their condolences at the cemetery, Jim and Jean solemnly drove back to the city, neither one saying a word but both thinking how lucky they were to have another chance to carefully plan. Their own children, Jeanette (17), Julia (15), Jonah (12) and Jack (2), deserved the chance to grow up in greater security. They were enormously proud of their family business which had grown over the years and now had branches in six states with annual sales of $45,000,000 and a total stock value of $12,500,000. They wanted the children to be able to take over the business if they chose to. The two oldest kids had already been working in the packaging plant over the summers and after school and had even been suggesting ways of marketing the product to a younger demographic. The business had been kind to them. They owned their $500,000 home outright, free of any encumbrances. They had a lovely vacation hideaway at the Lake of the Woods, valued at $1,350,000 and an eye-popping portfolio of stocks with a current market value of $5.2 million dollars and a cost basis of $1,675,000. Jim had also inherited a working farm following his father's death in 2011. The farm was valued at that time at $1,200,000 with a current assessed valuation of $1.5 million. Jim and Jean had also purchased a small shopping center in town with the proceeds from a farm left to her in 2001. Their financial advisor at the time suggested performing a 1031 exchange with the proceeds in order to avoid taxes. This farm was sold for $615,000 and they purchased the shopping center for $725,000, using all of the proceeds from the sale plus some savings. Jim and Jean had managed to treat each other to several goodies as their business became more successful. They own several vehicles, two boats, two jet skis, a legion of clothing and jewelry and a fine art collection, all valued at over $2,000,000. Both of the principles had purchased $3,000,000 life insurance policies on each other, naming their estate as the beneficiary and they had squirreled away $75,000 in cash. As rabid Nebraska Cornhusker fans, they purchased 8 season tickets each year to all sporting events and they had pledged $1,000,000 to the University of Nebraska for scholarships. They were also discussing major philanthropy options in the local area. As they walked into their home thinking of Tony, they heard peals of laughter from their children upstairs and saw evidence that their eldest daughter had friends over for pizza. They knew they had to act now before they got caught up again in their daily grind. Jim and Jean immediately phone you for advice.

Address the following issues:

1. Help them devise a detailed estate plan using all of the tools legally available for purposes of minimizing federal and state tax liability.
2. Pay particular attention to the appropriate use of "trusts" and help them further decide appropriate mechanisms to insure that their children will be taken care of in the best manner possible, while insuring the continuation of their business and the funding of some of their pet charitable projects.
3. Draft a sample testamentary document to accomplish this plan and make inter vivos transfer suggestions.
4. Make sure you fully explain the potential tax consequences if they both should die intestate as well.
5. You may assume that neither party will die this calendar year and you must provide definitions for the following terms as part of your answer: inter vivos, per stirpes, per capita, testamentary, trusts, 1031 tax-free exchange, joint tenancy, tenancy in common, charitable trust, irrevocable trust, and estate tax credit.