Estate Planning

Contents
Meaning & Definition Role of Estate Planning Estate planning process Legal Aspects

Meaning & Definition

Estate Planning: The preparation of a plan of administration and disposition of one's property before or after death, including will, trusts, gifts, power of attorney, etc. The preparation includes taking actions that will minimize taxes and distribute assets to the appropriate heirs.

Why Estate Planning Important?

A well-drafted estate plan is your assurance that the taxes and costs associated with your death will be minimized. A good estate plan also keeps the process of settling your estate as simple and efficient as possible. Most importantly, your estate plan will ensure that your assets will be used to benefit the people or institutions that you choose, in the amounts that you choose.

Principles /Role of Estate Planning

Provide Financial Security for family members Plans to manage your affairs if you become disabled Eliminate or minimize tax exposure Closely related to insurance and retirement planning

Potential Estate Planning Problems

Excessive transfer cost Lack of liquidity Improper disposition of assets

Inadequate income at retirement Inadequate income, if disabled

Inadequate income for family at estate owners death Insufficient capital

Special problems

Who Needs Estate Planning?

Estate planning should be part of everyones financial plan, whether they are married or single, having five children or none. The two main areas of estate planning are people planning and asset planning.

People Planning
People planning means anticipating the psychological and financial needs of those people you love and providing enough income or capital or both to ensure a continuation of their way of life.

People Planning
People planning is especially important for: Individuals with children who are minors; Children who are exceptionally artistic or intellectually gifted; Children or other dependents who are emotionally, mentally, or physically handicapped; and Spouses who cant or dont want to handle money, securities or a business

Asset Planning
When an estate involves a closely held business, estate planning is essential to stabilize and maximize its asset and income-producing values, both during the owners lifetime and at the owners death or disability. Likewise, estate planning is essential to avoid the special problems that occur when an estate owner holds title to property in more than one state.

Why does an Estate Break Up?

Quite often, when people die, their estates die with them- not because theyve done anything wrong, but because they havent done anything. There are numerous forces that, if unchecked, tend to shrink an estate, reduce the usefulness of its assets, and frustrate the objectives of the person who built it.

Why does an Estate Break Up?

These include: Death-related costs Inflation Lack of liquidity Improper use of vehicles of transfer disabilities

The Estate Planning Process

1.Assess your family situation and set planning goals 2. Gather comprehensive and accurate data 3. List all assets and determine the value of your estate 4. Designate beneficiaries of your estates assets 5. Estimate estate transfer costs 6. Formulate and implement your plan 7.Review the plan periodically and revise it as necessary

Data needed for Estate Planning

Personal data: Names ,addresses, phone numbers, birth dates, marital status, marital agreements, wills, trusts, custodianships, trust beneficiary, gifts or inheritances, social security numbers, and military service Classification, title, indebtedness, date and manner of acquisition, value of marketable securities and their locations Name of insured, kinds of policies, amounts, insurance companies, agents names and addresses Medical insurance co., policy nos. and benefits Property: Life Insurance: Health Insurance:

Business Interest:
Employee Benefits: Family Income: Family Finances: Other data: Liabilities: Authorization for informtion:

Name, address, ownership, desired survivorship control

Group insurance plans, pension benefits Income of client, spouse, income tax information Budget information, investment preferences, capital needs Retirement, Disability and upon death Listing of liabilities, creditors, amounts, whether insured or secured Life insurance, executor

THANK YOU

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