will Flashcards
What is Estate Planning ?
A clear and complete plan of what should happen upon your death
Living Will
A plan to care for someone who is young or incapacitated and cannot care for themselves
Trade-Offs
A trade-off is giving up one thing for another.
Guardianship
requires a legal document called a will
Will
determines guardians, money flow otherwise determined by court
Who can help with planning?
You & your family,CPA & CFP,Financial Institutions,Attorneys,Other professionals as needed
What is an Estate
An estate is the assets of a deceased person after all debts are paid. It is used to determine how your wealth will be allocated on or before death
Forms of giving
Being kind to another,Knowledge,Money,Skill,Talent,Items
what is a form of healthy giving
Giving out of excess in your life
whats another form of healthy giving
When you want to give back or pay it forward and the result is positive emotions
what is unhealthy giving
Does not enhance the well-being of both the receiver and giver.
whats another form of unhealthy giving
When giving is a method of gaining power over another.
what are some ways you can prepare for giving
Create a spending plan Evaluate needs, wants and values Assess your time Plan for expenses, such as Christmas gifts Avoid using credit for giving
what are money management tools
Statement of Financial Position
Income & Expense Statement
Spending Plan
What other factors should be considered when deciding what and how to give to others?
Values Money Time Needs Wants Finances
How does giving change throughout the life cycle?
Children are often the recipients of giving
Adults give many of their resources to their children or family members
When someone passes on, their estate plan identifies how their assets will be given to individuals and/or community organizations
how is financial statement related to giving
Assess the overall financial position to evaluate pros & cons of giving
Creates a plan for special events that involve giving
how does earning related to giving
Choose a career that can help you meet your giving goals
A career choice could be an ultimate form of giving
Be grateful to those that have given to your growth of human capital
how are savings and investing related to giving
Emergency savings should be established prior to giving
Savings and investing are valuable avenues to give
how is Risk management related to giving
Ensure you have planned for life events and accounted for such expenses prior to giving
what does your present self do to your future self
it impacts it
True or false living in a community is better than living on your own
True
Is it true that you are responsible for your present self and your future self
yes that is very true
What does investment do
helps manage risk and allows you to cope with risks and uncertanties
Specific gifts
particular item or property in an estate transferred to beneficiary on owner’s death. Specifics must be provided. (house, jewelery, 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 charitie
Gifts left to charity in will are free from inheritance tax.
creating a will is one way of doing what
its a way to show appreciation and give back
Giving through a will can do what
It can give your family the future financial security that they might need
what is a living will
A living will has nothing to do with where your assets go.
It is a medical document that tells doctors and family members what kind of care you want if you become incapacitated and cannot express wishes.
To make sure doctors follow these orders you need a durable power of attorney for health care and an advance directive. These two items instruct the doctor and designate a person to make decisions for you in terms of health care.
WHAT IS THE DIFFERENCE BETWEEN A WILL AND A LIVING REVOCABLE TRUST?
A will designates where your assets go upon death. But sometimes you need someone to make these decisions when you get sick. This is why you need a living revocable trust.
You can appoint yourself as the trustee when you are well and a successor trustee if you become incapacitated.
This makes it easier to get money to your beneficiaries without going through probate court, which can take between 6 months and two years.
A living revocable trust with an incapacity clause will cover all of the bases.
WHAT IS A HOLOGRAPHIC WILL?
A holographic will is one you write with your own hand. Suze says they are better than nothing but there are far better alternatives. To avoid problems, set up a living revocable trust and have the trust as the beneficiary of the life insurance policy.
WHEN SHOULD YOU THINK ABOUT GETTING A WILL?
Everyone has a will whether you know if or not. The state has already designated where your assets are going if you do not decide for yourself. Suze says everyone needs a will if you have any assets whatsoever. Designate who will get your car, puppy, furniture, etc. Once you have real estate, it is then time for a living revocable trust.
ESTATE TAX
In 2008, a parent can pass up to $2 million to a child estate tax free. In the future that is going to change. The amount that can be passed on will increase until 2010 according to the following scale:
TERM LIFE INSURANCE POLICY
If you have a policy of which you are the owner, you are insured and your children are the beneficiaries, the life insurance death benefit goes into your estate when you die. This money passes down to your children. If this money is over the estate tax limit, your children are going to have to pay 40%-45% of the insurance policy to estate taxes.
SHOULD YOU SET UP A UTMA OR UGMA ACCOUNT FOR MY CHILDREN IN MY WILL?
If your kids are minors and you have a will, you can set up a UTMA (uniform transfers to minor account) or UGMA (uniform gift to minors account) where money goes into the account and a custodian protects the account. Suze thinks a better idea is to set up a living revocable trust and name the trust the beneficiary of the life insurance policy. Then you can designate a successor trustee to protect the children’s money.
what are Wills & Trusts Special
Wills and trusts help us to protect ourselves. These documents indicate who will make important decisions for us in the future. For this reason, understanding how wills and trusts work is extremely important. When do you need a will? When do you need a trust? What is the difference between the two? Suze Orman explains the ins and outs of this very important topic.
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
assets subject to the trust
what is a trust
an agreement that determines how a person’s property is to be managed and distributed during lifetime and upon death
What is a revocable living trust
A living trust that can be dissolved
irrevocable living trust
living trust that can not be changed, although it can provide income to the grantor
Testamentary Will
formally prepared document signed in the presence of witnesses.
Whats the purpose of a will
Ensures the estate is distributed as desired
Beneficiaries (heirs), the persons specified in will receives a part of an estate
T prevent the courts from assigning an administrator who may not carry out your wishes.
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 assets and in what proportions
- Court decides who raises your minor children
- Heirs may unnecessarily incur estate taxes
