Alyssa Evans

Finance 3060
Report
Estate Planning
Estate planning is a very important process of accumulating, managing,
conserving, and transferring of the wealth and possessions that we are wanting to give to
our dependents or whoever we so desire when we die. There are many goals, objectives,
and risks of estate planning. The common goals and objectives of estate planning include:
fulfill clients wishes when transferring the property, minimize transfer costs, minimize
transfer taxes, maximize net assets to heirs, guardianship should be provided, clients
health care decisions should be fulfilled, and be able to provide needed liquidity at death.
The risks that go along with planning an estate include: transfer taxes are excessive,
transfer costs are excessive, clients family is not property provided for later on
financially, clients property transfer wishes to go unfulfilled, and there isnt enough
liquidity to cover future clients debts or costs of their death. The estate planning process
consists of four steps, which include: determine what your estate is worth, choose your
heirs and decide what they receive, determine the cash needs of the estate, and select and
implement your estate planning techniques.
The client and planner relationship can come about in many different ways, even
though many clients are very hesitant about have a financial planner plan their estate for
them. Many clients feel this way because of the concern of expenses with estate planning;
they believe that estate planning is only really for those who have a lot of money, or to
avoid their own death. It is very important to gather client information and their ways in
which they want to transfer their estate. In addition, gathering a clients information is
essential because it allows the financial planner to gain a better understand of the clients
finances and possible risks that could be involved. There are many things a financial
planner should collect, but I am only going to name a few: copies of their wills and trusts,
copies of their annuity contracts, their current financial statements at that point in time, a
very detailed list of assets and liabilities, and the family information. Also, there are
many common transfer objectives that go along with estate planning. These transfer
objectives include: avoid the probate process, use lifetime transfers, plan for future
children, transfer property as they want too and make estate and taxes cheaper so they can
maximize their assets received by their past heirs, make sure to meet liquidity needs at
death, plan for incapacity of transferor, make sure to provide for the needs to the spouse
that is still alive, and be sure to make arrangement to fulfill the charitable intentions of
the transferor.
Estate planning requires financial planners to make sure they have effective
documents included in the estate plan. The basic documents of estate planning consist of:
wills, letters of instruction, property must have powers of attorney, durable powers of
attorney for health care, living wills, and do not revive orders. Wills are an important part
of any form of estate plan. It is a legal a document that allows that person who made the
will to control that way they want their property dealt with when they die. Letters of
instruction gives the specific details how the maker of the will wishes to distribute
possession and funeral wishes. This letter, which is given to the executor of the property,
can contain location of personal documents, if there are any safety deposit boxes, and

other financial information that they will need to take care of the estate. The power of
attorney allows a trusted person who is authorized to act of someone elses behalf. A
durable power of attorney for health care makes sure an agent is appointed to make any
sort of health decisions for someone who is not able to make those decisions. A living
will allows the person who owned the estate to provide information on their last wishes.
Also, the purpose of a living will allows people who are terminally ill to die when they
wish too. Do not resuscitate orders are when someone has been sent to the hospital and
are very close to death. In addition, this only applies to CPR and doesnt apply to another
other type of medical treatment.
I found a really interesting article about estate planning called Five Things Every
Woman should know about when estate planning. Since around fifty years ago, women
have taken on a major role in the workplace. Therefore, women have are now more
involved in the families financial areas and are now help make long-term planning
decisions. It is known a fact that women usually live longer than men. Also, women tend
to earn less money over their lifetime than the average man. There are five important
aspects of estate planning that every woman needs to realize. First, if you have children
that are young, it important that you have a will. Second, women just get a financial
power of attorney that can keep them and their family out the of the court system. Third,
they should have a durable power of attorney for their healthcare that allows you choose
someone to make medical decisions if you are not able too for yourself. Fourth, a
revocable living trust can help you avoid probate. Fifth, it is important to keep an eye on
their beneficiary designations and periodically review these designations.
It is very important to understand and avoid estate taxes in estate planning. Estate
taxes are a tax on the net value of a person whos deceaseds estate. A gift tax is a tax
when someone transfers the property assets to another individuals while not receiving
anything in return for the transfer. The unlimited marital deduction can only apply to
spouses that are still living and are United States citizens. Also, this deduction allows for
assets to be transferred free from any type of tax being added on to it. Generationskipping transfer taxes is where the shift of property takes place when it is given to
someone who is two or more generations younger than the person giving the gift. There
are four steps to calculate your own estate taxes. Step 1, you calculate the value of the
gross estate, which includes the assets of the deceased. These valued assets are life
insurance, personal or real property, pensions, and investments. Step 2, you calculate
your taxable estate, which is equivalent to the gross value of the deceaseds estate minus
any debts, liabilities, funeral expenses, or possible charitable deductions. Step 3, you
calculate your gift-adjusted taxable estate, which is equivalent to the taxable estate of the
deceased with any additional cumulative gifts of their lifetime that can be taxed. Lastly,
Step 4, you calculate your estate taxes, which are equivalent to the adjusted gifts
multiplied by the right tax rate for the estate.
A will is a legal document that allows the person, who has made the will, the right
to distribute the property, make who they want to be the executor, and make sure to avoid
any intestacy schemes. I found a really interesting article about the intestacy rules called,
Wills and inheritance: how changes to the intestacy rules affect you. On October 1,
2014, began the change in the testacy rules. When someone dies with no will in place,
there are rules to determine who is entitled to receive what. This caused the life interest
concept to disappear. Whoever the surviving spouse is, will take the first $250,000 in

assets, and then be entitled to the rest. The children will only be able to receive what ever
is left above the $250,000. In addition, the children would have to wait until at least 18
years of age of the get it. The rules of inheritance include the following in order: children
or their descendants, parents, brothers or sisters of their descendant, half siblings or their
descendants, grandparents, uncles or aunts or their descendants, half uncles or aunts or
their descendants, and the whole estate passes to the crown. With the new rule in place,
children are no longer at risk of losing their inheritance if after their parents die they are
adopted.