Chapter 1- Overview

Question 1

The Estate Planning Process

Answer 1

Step 1 : data-gathering interview (personal information)
Step 2 : evaluation of an existing plan
- use of a financial fact finder (financial data)
- client interview
Step 3 : development of estate plan
- preparation
Step 4 : client review and approval of plan
Step 5 : implementation of plan
- execution of documents
- transfer of property
Step 6 : periodic review of plan

Question 2

Advantages of a Well-planned Estate

Answer 2

• property distribution according to the decedent’s wishes
• tax-saving options
• appropriate ownership of assets
• disability and last illness preparedness
• liquidity needs assessment
• personal peace of mind

Question 3

consanguinity

Answer 3

(blood relationship)

Question 4

intestate

Answer 4

(without a will)

Question 5

will

Answer 5

A will is a legal instrument whereby a person makes disposition of his or her property to take effect after death. Once a valid will has been executed, the statutes of intestate succession are largely displaced by the provisions of the will. Executing a will occurs when the testator, the person creating the will, signs it and satisfies any other state requirements to make the will valid, such as having witnesses also sign the
will.

Question 6

equitable apportionment

Answer 6

Equitable apportionment means that each bequest bears the tax it generates. For instance, if a beneficiary receives 15 percent of the taxable estate, the beneficiary is responsible for 15 percent of the death taxes.

Question 7

Obstacles to Effective Estate Planning

Answer 7

failure to plan for death
- not executing or updating a will
- not taking the time to think about who gets what and when
- believing the state succession statutes will cause property to pass the way the
estate owner would want it to
• outdated plan
- birth and death of family members
- failure to update decision makers and beneficiaries
- tax law changes
• overlooked provisions
- guardianship
- simultaneous death
- tax apportionment
• improper tax planning
• improper ownership of assets
• failure to plan for disability, illness, or changes in or loss of employment
• failure to consider inflation
• lack of liquidity
• psychological factors
- dealing with mortality
- procrastination

Question 8

The Estate Planning Team

Answer 8

The estate planning team has traditionally consisted of an attorney, an insurance specialist, a
bank trust officer, an accountant, and an investment counselor (see the figure below). A newer
member of the team is the financial planner.