1 What is Estate Planning?

Question 1

Process

Answer 1

• Accumulation,
• Management,
• Conservation, and
• Transfer of wealth,

considering

• Legal,
• Tax, and
• Personal Objectives

Question 2

Choices

Answer 2

Not always clear-cut due to emotions

Question 3

Cost Objectives

Answer 3

Minimize:

• Probate
• Documents
• Transfer taxes
• Opportunity costs
• Professional guidance

Question 4

Desired beneficiary Objectives

Answer 4

Eliminate conflicts between will and property titled with survivorship rights Eliminate conflicts between will and beneficiaries named in contracts

Question 5

Who needs Estate planning?

Answer 5

People with:

1. Spouses, domestic partners
2. Minor children
3. Dependents
4. Substantial assets
5. Specific items of personal property that they want to go to someone in particular (e.g., jewelry, antiques, collectables, art)
6. Charitable objectives
7. Issues that need to be dealt with after their death (Unrelated persons, Pets, Businesses ,Problem or special-needs family members)

Question 6

Benefits from Estate planning (7)

Answer 6

1. Reduce / eliminate potential estate tax.
2. Make effective transfers during life and at death, including gifts of assets expected to appreciate
3. Arrange for efficient business succession
4. Plan for health care decisions in case incapacitated.
5. Avoid probate, including costs and delays
6. Pass property to the chosen individuals
7. The client is afforded peace of mind.

Question 7

Costs/risks of not planning estate effectively (3)

Answer 7

1. Costs and delays
2. Unnecessary transfer taxes
3. Assets don’t go to desired heirs

Question 8

Transfer objectives

Answer 8

1. Avoid probate
2. Plan for children
3. Make lifetime gifts
4. Meet liquidity needs
5. Plan for the needs of pets
6. Fulfill charitable intentions
7. Plan for possible incapacity
8. Minimize gift and estate taxes
9. Plan for the transfer of businesses
10. Plan for the needs of other dependents (e.g., parents)
11. Provide for the needs of the surviving spouse/partner

Question 9

Estate planning process (8)

Answer 9

1. Gather client information
2. Establish client objectives
3. Define problem areas
4. Determine liquidity needs now and at regular intervals for remaining life expectancy, including estate transfer costs
5. Establish priorities for objectives
6. Develop a comprehensive plan with all information and objectives
7. Implement the plan
8. Review the plan periodically; update when necessary

Question 10

Estate planning process - Gather client information (10)

Answer 10

1. Family information (e.g., parents, children, ages, health)
2. Detailed list of assets, ownership, and liabilities
3. Medical and disability insurance
4. Life insurance in force, ownership, insured, and beneficiaries
5. Annuities
6. Wills, trusts, or gifts previously made
7. Powers of appointment held by the client h. Fair market value (FMV) of assets and an estimate of expected growth rate
8. Tax returns and mortgage information
9. Powers of attorney held for the client

Question 11

Estate planning process - Possible problem areas (4)

Answer 11

1. Disposition of assets
2. Liquidity issues
3. Excessive taxes or costs
4. Other situational needs (e.g., disability, long-term care)

Question 12

Estate planning team

Answer 12

1. May consist of
   
   • Attorney
   • Accountant
   • Life insurance agent
   • Financial planner
   • Trust officers
2. The financial planner helps to integrate the work of the team in developing the plan.
3. The financial planner must avoid the unauthorized practice of law, as defined by state law