40 Facts Flashcards
Forms of giving
1) Being kind to another
2) Knowledge
3) money
4) skill
5) talent
6) items
Healthy giving
giving out of excess in your life, when you want to give back or paw forward resulting in positive emotions
Unhealthy Giving
Doesn’t enhance well-being of the giver or receiver, when giving is a method to gain power over another
Preparing for giving
Create spending plans, evaluate needs wants and values, assess time, plan for expenses, avoid using credit
Savings and Investing
Establish emergency savings prior to giving, savings and investing are valuable avenues to give
What to know about giving
you’re better in a community than by yourself, your present self impacts your future self
Specific gifts
particular item or property in an estate transferred to beneficiary on owner’s death. Specifics must be provided. (house, jewelry, etc.)
Non-specific gifts
does not refer to specific item. (all my personal possessions)
Residuary gifts
everything left in estate after all debts, bills and taxes have been paid and specific and non specific gifts have been distributed
Gifts to children
executors will keep for safekeeping gifts to children under 18 until they become of age unless will specifies guardian or parents take receipt of gift on child’s behalf
Gifts to charities
Gifts left to charity in will are free from inheritance tax
living will
a medical document that tells doctors and family members what kind of care you want if you become incapacitated and cannot express wishes.
Difference between a will and a living revocable trust
1) A will designates where your assets go upon death
2) A living revocable trust with an incapacity clause will cover all of the bases.
holographic will
A holographic will is one you write with your own hand
2 ways to avoid estate tax
1) Set up an insurance trust
2) if your children are old enough and responsible, they can be the owner of the policy
grantor
person who forms the trust and supplies the assets
trustee
person named in the trust to administer the trust according to the terms and state trust law
beneficiary
the person for whose benefit the trust property is held by the trustee
intent from grantor
must have a valid legal purpose
property
asses subject to the trust
living trust
trust you assign the management of assets to a trustee while you’re living
Revocable living trust
living trust that can be dissolved
Irrevocable living trust
Living trust cannot be changed
Purpose of a Will
Ensures the estate is distributed as desired
Beneficiaries, the persons specified in will receives a part of an estate, to prevent the courts from assigning an administrator who may not carry out your wishes.
Types of Wills
- A Living Will
- Oral will
- Testamentary will
- holographic will
oral will
spoken testaments given before witnesses. Not widely recognized from a legal perspective
Testamentary Will
formally prepared document signed in the presence of witnesses.
Elements of a Will
name and place of residence description of assets names of spouse, children and other beneficiaries alternate beneficiaries specific gifts establishment of trust if desired cancellation of debts owed to you name of executor to manage the estate name of guardian for minor children name of alternative guardian your signature witnesses' signatures
Estate
An estate is the assets of a deceased person after all debts are paid
Estate - Primary Functions
Peace of Mind Maintain Control Protect Assets for Yourself and Loved Ones Estate Taxes Creditors Special Needs Avoid Probate
Consequences of No Planning
May need a guardianship
Medical wishes may not be carried out
State Law via a public probate process decides who receives your assests and in what proportions
Court decides who raises your minor children
Heirs may unnecessarily incur estate taxes
Determining estate taxes
Value of estate is the value of all assets minus any liabilities minus funeral and administrative expenses
Tax Relief Act of 2001
gradually increase tax free limit while reducing a maximum tax rate
Proper planning
reduce these taxes
Estate Taxes 2
calculate the value of your estate so that you can plan appropriately if your net worth exceeds the tax-free limit.
Probate
a legal process that declares a will valid and ensures the orderly distribution of assets.
Executing the Will
executor files forms in probate court, provides a copy of the will, a list of assets and liabilities of deceased, pays debts and sells necessary assets
Executing the Will 2
The executor typically opens a bank account for this purpose.
When can you write a will ?
A Will can be written by any person of legal age and being of sound mind and memory
What does a will ensure ?
It ensures that your assets will be given to family members or a designated beneficiary
