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Chapter 19. ESTATE PLANNING

The Tools and Uses of Estate Planning, and What Can Be Accomplished

A. If Not For Yourself, Then for Your ParentsB. Unexpected ProblemsC. What Is An Estate?D. What Is Estate Planning?E. The Rights Involved in Estate PlanningF. The Language of Estate Planning - A Necessary Glossary

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G. The Will - The Basic Clauses

1. Introductory Clause2. Revocation of Prior Wills3. Debts and Final Expenses4. Bequest Clauses5. Survivorship Clauses6. Appointment Clauses7. The Execution8. Changing a Will

a. When should a will be amended?9. Uncommon Wills

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H. Other Devices for Passing On Accumulated Wealth

1. Trusts2. Gifts3. Insurance4. Joint ownership

I. How to Proceed1. The Wrong Way2. The Right Way

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J. What Should Your Estate Plan Accomplish?1. Distribution and liquidity (See Personal Action Worksheet, Text page 575)

a. A costly failure to planb. Alternatives?

2. A sound program of management for estate assets3. Assurance of continued lifestyle4. Minimizing taxes

K. How Estate Taxes Work1. Three kinds - estate taxes, inheritance taxes, income taxes

L. It’s Never Too Early to Plan

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TALKING POINTS… Chapter Nineteen, Number One

One of the most overlooked aspects of estate planning, especially by younger couples, is arranging a guardianship of minor children if both parents die simultaneously, even though the odds are heavily against that happening. Assume that you are a married parent of young children. You want to deal with this problem. How would you react to the following concerns about the most likely candidates? (Note: if you don’t establish a guardianship, it can be up to the courts to do so.)

1. Your brother loves your kids, but he’s not married, and his lifestyle would be in conflict with the best interests of your children.

2. Your spouse’s sister and her husband would be ideal, but they already have three children of their own.

3. Your parents would adore being named guardians, and they have the space and the money to do so. But they’re well into their 60s and of another generation.

4. Your spouse’s parents live in a retirement home 1,000 miles away.

5. Your dearest friends, Pat and Fran, are childless. But they’re not family.

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TALKING POINTS…Chapter Nineteen, Number Two

Your father is well off. He remarried soon after your mother died. The new wife had little money of her own. Your father prepared a pre-nuptial agreement in which she agreed to accept a lump sum of money instead of any share of his estate. That’s fine with you, but how would you react if you learned:

1. Wife #2 never signed the agreement, and has resisted doing so.

2. Wife #2 signed the agreement and a few years later they amended it so she’d get twice the amount set forth in the original agreement.

3. Your father, wanting to head off any post-mortem battles between Wife #2 and his kids, gives her bonds equal in value to the amount in the 2nd pre-nup agreement, and asks her to sign a receipt acknowledging these bonds are in settlement of the pre-nup. But the receipt, unsigned, has disappeared.

4. On your father’s death, Wife #2 claims that she is owed the full amount of the 2nd pre-nup. She states the bonds he gave her were a separate gift and did not count toward the pre-nup settlement.