Personal Finance Cards Flashcards
Specific Gifts
particular item or property in an estate transferred to beneficiary on owner’s death. Specifics must be provided. (house, jewelery, etc.)
Residuary Gifts
everything left in estate after all debts, bills and taxes have been paid and specific and non specific gifts have been distributed
Grantor
person who forms the trust and supplies the assets
Trustee
person named in the trust to administor the trust according to the terms and state trust law
Beneficiary
The person for whose benefit the trust property id held by the trustee
Intent from Grantor
must have a valid legal purpose
Property
assets subject to the trust
Testamentary Trust
Created in a will by a testator who bequeaths his/her property to beneficiaries
Living Trust
trust in which you assign the management of your assets to a trustee while you are living
Revocable Living Trust
living trust that can be dissolved
Irrevocable Living Trust
living trust that cannot be changed, although it can provide income to the grantor
Will/Testament
A legal document by a person that names one or more persons to manage his/her estate and provides distribution of property upon death
Purpose of a Will
Ensures the estate is distributed as desired
A Living Will
document to make your family aware of the type of care you want to receive if you should become terminally ill, on life support, or permanently unconcious
Oral Will
Spoken testaments given before witnesses. Not widely recognized
Testamentary Will
Formally prepared document signed in the presence of witnesses
Holographic Will
written without the presence of witnesses. Rarely hold up in court.
3 Elements of a Will
Name of spouse, children, and other beneficiaries
Signature
Name of executor to manage the estate
Probate
a legal process that declares a will valid and ensures the orderly distribution of assets
Estate
the assets of a deceased person after all debts are paid off
What happens if there is no will?
The court appoints an administrator to make a decision on how the property is distributed
Estate Planning
The process of planning or how your wealth will me allocated on or before your death
What are the primary functions of an estate?
Peace of Mind
Maintain Control
Protect Assets for Loved Ones
What are two consequences of not planning your will?
Medical wishes may not be carried out
The court decides who raises your minor children
What happens if there is no surviving spouse?
A large estate is subject to estate taxes
How do you determine estate taxes?
The value of the estate is the value of all assets minus any liabilities minus funeral and administrative expenses
2001
estates with value over $675,000 are subject to federal taxes of 37%-50%
Tax Relief Act
Gradually increased tax free limit while reducing a maximum tax rate
Positive outcome of estate planning is…
You provide for loved ones after you are gone
Trade-off
Giving up one thing for another
What age must you be to make in order to estate plan?
18
Guardianship
Taking ownership of minor child/children
Who helps with planning?
CPA & CFP, financial institutions, Attorneys, and loved ones
Healthy Giving
giving out of excess in your life
Unhealthy Giving
When giving is a method of gaining power over another
What factors should be considered when deciding how and what to give to others?
Values, Money, Needs, Time, Wants, and Finances
Forms of Giving:
Money, kindness, talent, skill, items, and knowledge
“we make a living by what we earn, we make a life by what we give”
Winston Churchill
Attorneys
Provide you with insights for titling documents, wills, etc
Accountants
Help you determine net worth and see tax advantages
