Ch 1: An Overview Flashcards
(17 cards)
What is estate planning?
Develop a plan that will enhance and maintain the financial security and wishes of a client upon his or her death or incapacity.
What are the FOUR goals of estate planning?
- Distribution
- Management
- Accumulation
- Conservation
What is Code of Hammurabi (1750 B.C.)?
and
What is Statute of Wills (1540)?
Code of Hammurabi (1750 B.C.) is where a will could be altered to favor the eldest son (little current impact)
Statute of Wills (1540) gave people the ability to dispose of property upon death (significant impact).
The estate planning tax system is a unified tax system that includes _______ and _______.
gift
and
estate
How are liquidity needs assessed in estate planning?
By reviewing how property is titled, marital status, and types of property. The age, relationship, or existence of residuary beneficiaries do not matter because they get what is left.
What happens if there is no will in place? (4)
1) state succession laws controls property
2) property escheats to State Govt
3) Harder leave to charity
4) Can’t pick personal rep
What are the SIX estate planning process steps?
- Data-gathering
- Evaluation existing plan
- Development/Create plan
- Client review and approval of plan
- Implementation of plan (execution of documents and property transfers)
- Review
What are TWO reasons people do not have a will or plan in place?
Because they are not taking the time to think about it and some believe the state’s succession statutes will be sufficient.
What are THREE reasons a plan can become outdated?
- tax or trust law changes
- birth and death of family members
- new assets – digital assets
Currently, __________, is the only state that has a system of forced heirship to heirs other than the surviving spouse.
Louisiana
What is the American foundation of our estate planning laws?
English Common Law
What is state inheritance taxation?
A state tax paid when money or property is recieved from the estate of a deceased person.
What is federal transfer taxes?
A federal estate tax that applies to the transfer of property at death.
What are three roadblocks to estate planning?
- Improper tax planning
- Improper ownership of assets
- Lack of liquidity
What are the advantages of a proper estate plan? (5)
- follow wishes
- create liquidity
- give property to charity
- control
- management
A valid will does not solve all problems and should be reviewed…
every few years and after major life events.
Explain the meaning behind Elective Share.
The ability of a spouse to take under state law instead of under will – however, it is not forced, spouse has to elect or choose to take under state law, could get more money under the will or could get more money under the state elective share – will needs to be in place in order to get elective share
