Basic Estate Planning Strategies Color

8/3/2019 Basic Estate Planning Strategies Color

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Estate Planning


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Three Financial Stages of Life

Creation Conservation

Distribution


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The Objective of Estate

Planning: Distributing your financial asset wisely.

Yourh

ard

earne

dpossession s

houl

dgoto those whom you wish to support.

Tax saving.

Avoiding family fight.

Cost effectiveness.

Financial security in case of a mishap.

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To arrange for the orderlydispositionof assets in accordance with theintentions of the estate owner.

The Objective of Estate Planning


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What is estate ?

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What is Estate Planning?

Estate planning is a process.

It is a lifetime process.

The estate planning process hasfinancial dimensions.

The estate planning process has

equally important non-financialdimensions.


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Non-Financial Considerations

Disability protection.

Peace of mind byproviding for a

spouse. Peace of mind by

providing for children,grandchildren, andparents.

Family businesssuccession.

Selecting a trustee,

guardian, conservator and

personal representative.

Avoiding family conflicts.

Basic funeral

arrangements.

Organ donation decisions.


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Financial records.

Liquidity in the event of disability ordeath.

Liquidity to pass a family business

Deciding who takes what, when, and howmuch.

Minimizing transfer costs (taxes, courtfees, advisor fees, etc.).

Minimizing liability.

Financial Considerations


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If you are married

If you never married

New life styles The opportunity cost of

rationalizing

Analyze the personal aspects

of the estate planning


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The legal aspects of estate

planning Marriage certificate Birth certificates

Legal name changes Otherof additional important documents

Insurance policies

Transferrecord of joint bank account Safe deposit box records

Registration of automobiles

Title of stock and bond certificates10


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will

The legal declaration of apersons mind as to the

disposition of his or her

property After death.


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Will

Set of instructions.

Who takes what, how much,when, and under whatcircumstances.

No effect until death.

Trusts can be established in wills.

Can designate guardians &conservators for minors in wills.

Wills require probate.

Deceaseds

Estate

Beneficiaries

Net

Estate

Net

Estate


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Probate

Settling An EstateWith Court

Supervision


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Beneficiary Designation

Designating beneficiaries under lifeinsurance contracts or IRAs.

Unaffected by provisions in will andtrusts.

Unplanneddesignations can resultin unintendeddispositions and taxconsequences.

Should be coordinated with overallestate plan.

Asset

Mom

Dad

Owner

Designated

Beneficiary


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Types of will

Simple will

Traditional martial share will Exemption will

State dollar amount will

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SIMPLEESTATE PLANSIMPLEESTATE PLANEverything passes toWife at Husbands DeathAssumes Wife OwnsRs,1,000,000 Outright.

Calculations assume (1) the state death tax equals the

maximum state death tax credit allowable for federal

estate tax purposes and

(2) probate and other administration expenses are

zero.

Assumes both spouses die in

2011 without use of Applicable

Credit at first death

Ultimate Benefit to Children

Rs. 2,055,000

Current Estate

of Decedent

Rs.2,000,000

Marital Share

(Surviving Spouse)

Rs.2,000,000 Marital Share

Rs.1,000,000 Already Owned

Rs.3,000,000 Surv Sp Estate

Approximate Taxes on

Rs.3,000,000 upon

Surviving Spouses Death

Rs. 945,000

Maximum

Marital Deduction

Formula

Also known as I

love you will


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Traditional martial share will

Adjusted

gross estate{= gross

estate (debt+cost )}

Rs. 2,000,000

To the spouseRs.1,000,000+Rs.1,000,000

To Others

(children, otherheirs orbe held trust for the

family )

Rs. 1,000,000

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Children's

Rs. 2,500, 000


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Exemption trust will

Rs 2,000,000

YourEstateExemptions

Rs. 4,000,000

What your spouse getsmay be more than whatyou estimated!!!!!!!!!!!!

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Stateddollaramount will

YourEstate

Rs.2,000,000

Spouse

Rs. 1,000,000

Children

Rs. 500, 000

Others

Rs. 500,000

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Holographic

will

Formal

will

Statutory

will

Formats of will


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Steps of writing a will

Selects executor

Selecting an guardian

Finalizing will / altering& rewriting yourwill

Living will

Powerof attorney

Letterof lastinstruction

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Types of trust and estate What is a trust ?

Who is a trustor?

Revocable trust

Irrevocable trust

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Benefits of a Trust

Reduce orotherwise provide forpayment of estate taxes.

Avoid probate and transferyourassets

immed

iately to your

beneficiaries

Free yourself from management of your

assets while you receive a regular

income from the trust.

Provide income fora surviving spouse

orotherbeneficiaries.

Ensure that yourproperty serves a

desired purpose.23


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Types ofTrusts Credit shelter trust

Disclaimer trust

Living or intervivos trust

Testamentary trust

Life insurance trust

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Estate

Everything you own is your trust, such

as

Cash and bank accounts Stocks and bonds

Life insurances, employee benefit

Home and otherreal estate Notes accounts and claims receivables

Antiques and othercollections25


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What Is YourEstate?

in a nutshell

EVERYTHING YOU O

WN

less

EVERYTHING YOU OWE

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Federal Estate and Gift

Exclusion Amounts

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Year Maximum Rate Estate

Exclusion

Gift Exclusion

20034

9% $1.0 million $1.0 million2004 48% $1.5 million $1.0 million

2005 47% $1.5 million $1.0 million


2007 4

5% $

2.0 million$1.0 million


2009 45% $ 3.5 million $1.0 million

2010 35% Gift Repealed $1.0 million

2011 55

%+5

% $1.0 million

$1.o million


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ESTATE TAX CALCULATION

WORKSHEET - 2008

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Gross Estate 2,500,000

-Debts & Admin. Expenses 100,000

-Marital Deduction 0

-Charitable Bequests 50,000

Taxable Estate 2,350,000

+Adj. TaxableGifts 30,000

Taxable Amount 2,380,000


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ConclusionThe most carefully crafted estate plan

which is not implemented is the same ashaving no plan.

Basic Estate Planning Strategies Color

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