Lý thuyết tài chính - Preserving your estate

PFIN4Preserving Your Estate15Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GITMAN/ JOEHNK/ BILLINGSLEY2Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Describe the role of estate planning in personal financial planning, and identify the seven steps involved in the processRecognize the importance of preparing a will and other documents to protect you and your estateExplain how trusts are used in estate planningLEARNING OUTCOMESPFIN4 | CH153Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Determine whether a gift will be taxable and use planned gifts to reduce estate taxesCalculate federal taxes due on an estateUse effective estate planning techniques to minimize estate taxesLEARNING OUTCOMES (continued)PFIN4 | CH15Estate Planning4Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing a plan to administer and distribute assets after death according to:Deceased’s wishesNeeds of survivorsPFIN4 | CH15Exhibit 15.15Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Potential Estate Planning Problems and Major Causes or IndicatorsWho Needs Estate Planning ?6Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. People planningAnticipate psychological and financial needs of loved onesProvide adequate resources to maintain life of loved onesAsset planningEnsuring that assets are received by desired beneficiaries upon a person’s death or incapacityPFIN4 | CH15Reasons for an Estate Break Up7Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Death-related costsInflationLack of liquidityImproper use of vehicles of transferDisabilitiesPFIN4 | CH15Types of Estate8Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ProbateReal and personal property owned by a person that can be transferred at death by willGrossProperty owned by the decedent is subject to federal estate taxes upon a person’s deathNonprobateProperty which won’t be part of the estate for federal estate tax purposes yet will pass to the family upon a person’s deathPFIN4 | CH15Exhibit 15.29Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Steps in the Estate Planning ProcessWill10Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Expresses how a person’s property should be distributed upon his or her deathWritten and legally enforceable documentIntestacy: Situation that exists when a person dies without a valid willTestator: Person who makes a will that provides for disposition of property at his or her death PFIN4 | CH15Requirements of Preparing the Will11Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Provide a plan for distributing the testator’s assets according to:Testator’s wishes and beneficiaries’ needsFederal and state dispositive and tax lawsConsider the changes in family conditions occurring after execution of the willBe concise and complete in describing the testator’s desiresPFIN4 | CH15Features of a Will12Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Introductory clauseDirection of paymentsDisposition of propertyAppointment clauseTax clauseSimultaneous death clauseExecution and attestation clauseWitness clauseWill13Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Requirements for being validMental capacityFreedom of choiceProper executionChangingCodicil: Document that legally modifies a will without revoking itWays of revokingMaking a later will that revokes prior willsWill14Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Making a codicil that expressly revokes all wills the one being modifiedMaking a later will that is inconsistent with a former will Physically mutilating, burning, tearing, or defacing the will with the intention to revoke itSafe guardingOriginal will needs to be kept in a safe-deposit boxLodging of the will - Filling and safekeeping the will in the office of the probate courtWill15Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Letter of last instructionsInformal memorandum that is separate from a willContains suggestions for carrying out a decedent’s wishesAdministration of an Estate16Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Probate process: Court supervised disposition of a decedent’s estateA local court supervises probate process through the executor and administratorExecutor: Personal representative of an estate designated decedent's willAdministrator: Personal representative of the estate appointed by the court if the decedent died intestateOther Estate Planning Documents17Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Durable power of attorney for financial mattersAuthorizes another person to take over someone’s financial affairs and act on his or her behalfLiving willStates the treatments a person wants incase of a terminal illnessDurable power of attorney for healthcareAuthorizes an individual to make health care decisions on behalf of the principalEthical willPersonal statement that shares values, blessings, experience and hopes and dreams for the future, with loved ones Forms of Joint Ownership18Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Joint tenancyOwnership by two or more parties with the survivor holding all property upon death of one or more of the ownersTenancy by entiretyOwnership by husband and wife in which property passes to the surviving spouseCharacteristics of Joint Ownership19Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Right of survivorship: Surviving joint owners of property receive title to the deceased joint owner’s interest in the propertyJoint tenancy may consist of any number of persons without any relationTenancy by entirety can exist only between husband and wifeJoint Ownership20Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Each joint tenant can unilaterally sever the tenancy in a joint tenancyTenancy by entirety can be severed only by mutual agreement, divorce, or conveyance by both spouses to a third partyCo-owners must have equal interestsOther Forms of Ownership21Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Tenancy in commonCo-ownership where there is no right of survivorshipAllows each co-owner to leave their share to whomever they desireCommunity propertyMarital property co-owned equally by both spouses while living in a community property stateTrusts22Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Created when one party transfers property to a second party for the benefit of third partiesGrantor: Person who creates a trust and whose property transferred into itTrustee: Organization or individualSelected by a grantor to manage and conserve property in a trustBeneficiaries: People who receive benefits from a trustTrusts23Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15PurposesAttain income and estate tax savingsManage and conserve propertyQualities of a Trustee24Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Posses sound business knowledge and judgmentHave an intimate knowledge of the beneficiary’s needs and financial situationBeing skilled in investment and trust managementBeing available to beneficiariesAbility to make impartial decisionsTypes and Characteristics of Trusts25Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Living: Created and funded during grantor’s lifetimePour-over wills: Provides for passing of the estate to an existing living trustRevocable living: Grantor reserves the right revoke the trust and regain propertyIrrevocable living: Grantor gives up the right revoke or terminate the trustTypes and Characteristics of Trusts26Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Testamentary: Created by decedent’s will and funded through probate processIrrevocable life insurance: Major asset is life insurance on the grantor’s lifeFederal Unified Transfer Taxes27Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Tax on right to transfer property from one individual to another which affects:Gift tax: Tax levied on the value of gifts made during the giver’s life time Estate tax: Tax levied on the value of property transferred at the owner’s deathApplicable exclusion amount (AEA): Credit applicable to the amount of federal estate tax owed by the person at deathUnified rate schedule: Applied to all taxable transfersMeans for Reducing Amount for Tax Purposes28Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Annual exclusions: Amount given each year without being subject to gift taxGift splitting: Method of reducing gift taxesCharitable deductionsMarital deductionsQualified Terminable Interest Trust (QTIP)Steps in Computation of Federal Estate Tax29Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Determine the gross estateFind the adjusted gross estateCalculate the taxable estateCompute the estate tax baseDetermine the total death taxesDetermine federal estate tax dueEstate Planning Techniques30Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH15Gift giving programUse of the unified transfer tax creditCharitable contributionsLife insurance trustTrustsValuation issuesMinority interestMarketability discountBlockage discount31Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Estate planningProbate estateGross estateWillIntestacyTestatorCodicilLetter of last instructionsProbate processExecutorKEY TERMSAdministratorDurable power of attorney for financial mattersLiving willDurable power of attorney for health careEthical willRight of survivorshipJoint tenancyTenancy by the entiretyPFIN4 | CH1532Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Tenancy in commonCommunity propertyTrustGrantorTrusteeBeneficiariesLiving (inter vivos) trustRevocable living trustIrrevocable living trustPour-over willTestamentary trustKEY TERMSIrrevocable life insurance trustGift taxEstate taxApplicable exclusion amount (AEA)Unified rate scheduleAnnual exclusions Gift splittingUnified tax creditPFIN4 | CH1533Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYEstate planning involves developing a plan to administer and distribute assets after death according to deceased’s wishes, and needs of survivorsA will is an important document as it expresses how a person’s property should be distributed upon his or her deathTrusts facilitate the transfer of property and the income earned from it to another partyPFIN4 | CH1534Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYFederal unified transfer tax affects gift tax and estate taxFederal estate taxes are levied on the transfer of property at deathEstate planning techniquesGift giving programUsing unified transfer tax (UTT) creditInvesting in life insuranceEstablishing trustsPFIN4 | CH15