Estate Planning Basics Flashcards
Estate Planning Definition
Process of Accumulation, Management, Conservation, & Transfer of wealth considering Legal, Tax, and Personal objectives
Effective Transfers Definition
Decedent’s assets are transferred based on his Wishes
Efficient Transfers Definition
Transfer costs including Taxes are Minimized
Maximize net to Heirs
Intestacy Laws Meaning
Means dying without a Will
Legatee
Person receiving from decedent’e estate under the Will
Heir Meaning
Person who inherits under the Intestacy Laws of the state (dying without a will)
Abatement Definition
Reduction of a bequest
(Will leaves a $100k portfolio to cousin, at time of death it’s only worth $20k, this is a reduction of a bequest)
Ademption
Extinguishment of a Right
(Asset written in the will was sold or disposed of by time of death, so you don’t get it, also don’t get a substitute asset)
Durable POA for Health Care
In Writing
Survives Disability but NOT Death
Advance Medical Directive
Power to terminate life sustaining treatment
Holographic Will
Written in testator’s handwriting
must be signed and dated by testator
Non-cupative Will
Oral
Dying declarations made before sufficient witness
Not valid in all states
Usually only covers tangible property)
Statutory Will
Drawn by an attorney, complying with laws of domiciliary state
Survivorship Clause of a Will
Requires the Bene to survive the decedent for specified period of time in order to inherit
Can NOT be longer than 6 months for transfer to qualify for unlimited marital deduction
Disclaimer Clause
Reminds Legatee they can disclaim inheritance
Clause may direct who inherits if they do disclaim
Rules to Disclaim
Disclaimer can NOT have benefited from it before disclaiming
(so Disclaim it before the title transfer)
Must be in writing within 9 months
Person disclaiming can NOT direct disposition of property
Reasons to Disclaim?
Surviving spouse may disclaim so more assets go to kids and the applicable estate tax credit is utilized
Kids may disclaim so surviving spouse can inherit to utilize marital deduction
Power of Attorney
Can include the power to appoint assets
Ends at death of principal
May be revoked anytime by principal
Power of Appointment
A power included in a Trust or POA
Power to transfer assets
Allows holder to direct assets to another (pay bills)
May survive death of grantor (If the power was inside a trust and the trust lives on)
May be revoked anytime by principal
POAs: Who do you, the Planner, work for when the Principal dies?
Accounts will be frozen when principal dies until,
Estate Administrator brings the Letters of Testamentary to gain control of accounts
Can the Planner refuse to take action that the POA requests?
If the POA agent requests an action that’s harmful to the principal, the planner can refuse to take action
Contacting Compliance Dept. is also a good answer choice
General Power of Appointment: When is it used, marital or non-marital trust?
Used for Marital Trusts so they can utilize unlimited marital deduction
Does the Holder of a General Power of Appointment have inclusion of the assets in their gross estate at death?
If you hold the power at death, you will have inclusion of value of the assets in your gross estate
