Chapter 1 - Introduction to Estate Planning Flashcards
Define Effective Transfer
A transfer of a person’s assets to the person or charitable institution intended by that person.
Define Efficient Transfer
A transfer in which costs of the transfer are minimized consistent with the greater.
Define Estate Planning (process of 4, considering 3)
The process of: -accumulation -management -conservation & -transfer of wealth considering -legal -tax & -personal objectives
Define Heir
One who inherits under state law
Deine Legatee
One who inherits under the will
Define Probate Process
The legal proceeding that serves to prove the validity of existing wills, supervise the orderly distribution of decedent’s assets to the heirs, and protect creditors by insuring that valid debts of the estate are paid.
Define Transfer Costs
Includes the gift and estate taxes and the costs of avoiding taxes, such as the cost of documents, planning, trusts, and other professional fees.
Define Unauthorized Practice of Law
The proffering of legal advice or services by one who is not a licensed attorney.
What are the majors laws that changed up estate taxes? 3
- EGTRRA 2001 - The Economic Growth and Tax Relief Reconciliation Act of 2001
- TRA 2010 - The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
- ATRA - American Taxpayer Relief Act of 2012
What is the goals and objectives of estate planning? 6
- Fulfill client’s property transfer wishes
- Minimize transfer taxes
- Minimize transfer costs
- Maximize net assets to heir
- Provide needed liquidity at death
- Fulfill client’s healthcare decisions.
Why do people avoid estate planning? 3
- Some people are afraid to talk about death
- Some people are unaware of the costs that accompany wealth transfer upon death.
- Some people may not realize that alternative transfer devices exist and their pros and cons.
Identify the risks associated with failing to plan for estate transfer. 5
- Client’s property transfer wishes go unfulfilled
- Transfer taxes are excessive.
- Transfer costs are excessive
- Client’s family not properly provided for financially
- Insufficient liquidity to cover client’s debts, taxes, and costs at death.
Who/What are the three primary recipients of a decedent’s assets?
- Heirs & Legatees
- Institutions (Charities)
- Government
What are the six basic steps of of the estate planning process?
- Establish the planner/client relationship.
- Gather client information, including the clients current financial statements and established the clients transfer objectives, including family and charitable objectives.
- Determine the clients financial status.
- Develop the comprehensive plan of transfers consistent with all information and objectives.
- Implement the estate plan.
- Review this estate plan periodically and update the plan when necessary (especially for changes in family situations).
What is usually the most important estate planning client objective?
Effective Asset transfers to heirs.
