Estate Planning

Estate planning deals with tax objectives, wills and living trusts, the unlimited marital deduction, saving the "second tax," holding title to property, lifetime gifts and trusts, life insurance and annuities, employee benefit plans, business interests, and post-death problems.

I. The Estate Planning Introduction

"Unless we prepare for our deaths, there is uncertainty as to where our assets and liabilities will end up when we die."

What would happen if you were to die five years from now? Would you be ready for such an event? Obviously most people are not ready to face such an end, but we can at least have our financial situation protected for our family and for our loved ones.

This is where estate planning comes in. A wise person will plan not only for what lies ahead for him in the future, but includes planning for what happens beyond him.

Estate Planning Defined

Estate planning deals with the conserving and transferring of wealth when taking in to consideration legal, tax, and personal objectives. The goal of a financial planner should be to help the client plan an effective and efficient transfer of wealth after death. This means that the assets of a person must transfer to the person, charity, or institution intended by the client at minimal transfer costs and transfer taxes.

Why People Don't Estate Plan

Some people just do not want to talk about their death. Its morbid. While others just do not know how many expenses can result from a death, nor may not know the true total value of their assets.

Steps to the Estate Planning Process

  1. The relationship building phase - The establishment of a trustful relationship between the planner and client must take place. The planner needs to understand the clients transfer objectives
  2. The research phase - A planner needs to determine the financial status of the client by gathering the client's financial information.
  3. The planning phase - After gathering enough information, a comprehensive plan must be constructed that can be understood by the client. Then the estate plan should be delivered.
  4. The implementation and maintenance phase - After delivering the plan, the planner must hold their fiduciary duty to their client by following up to account for any major changes in the client's life.

Other Necessary Professionals to an Estate Plan

A financial planner may know all the building blocks to a estate plan, but a financial planner may not be licensed to create all of those blocks. Other professionals may be needed in order to effectively create an estate plan.

  • Attorney - This professional is needed for drafting and review of legal documents
  • Certified Public Accountant (CPA) - A CPA is needed for identification of assets, calculation of the adjusted basis of assets, and tax planning considerations.
  • Licensed Insurance Specialist - An insurance agent is needed to verify assets are protected and that those assets are liquid at death.
  • Any Trust Officers That Manage The Assets of Any Trust

The financial planner should be the person who ties these professionals together in to the estate plan for the client. Beware of any professional in the team who may try to take away or scare you into buying products or services that was not part of the estate planning team discussions. Your financial planner should be your trusted manager of the estate planning team, and a single member should not advise without discussing with the financial planner.

II. Basic Estate Planning Documents

III. Types of Property Interests

IV. The Probate Process

V. Gift Tax

VI. Estate Tax

VII. Transfers During Life and At Death

VIII. Trusts

IX. Charitable Giving

X. The Unlimited Marital Deduction

XI. Life Insurance in Estate Planning

XII. Special Elections and Post Mortem Planning

XIII. Generation-Skipping Transfers

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