CC3152_L12_ch15+ - ESTATE PLANNING CC3152 Principles of...

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CC3152 Principles of Financial Planning ˟˘˖˧˨˥˘ʳ˄˅ ESTATE PLANNING
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2 Developing plans and taking actions during your lifetime to accumulate, preserve, and distribute your wealth on your death according to your wishes, while minimizing taxes and transfer costs. (I) Estate Planning [LG1]
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3 Two Main Areas ! People planning : means anticipating psychological and financial needs of family and providing enough income or capital or both to ensure a continuation of their way of life. – E.g. mentally or physically handicapped children (and other relatives) may need nursing or medically care ! Asset planning : to make sure your assets will go to the desired beneficiaries.
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4 Why Does An Estate Break Up? ! Death-related costs First-level costs, e.g. medical bills for a final illness, funeral expenses Second-level costs, e.g. fees for lawyer & accountant with administrative costs and estate taxes; outstanding long-term liabilities ! Inflation Fail to continuously rearrange an estate plan to counter effects of inflation can impair the value of assets, e.g. liquid assets, investment, etc. ! Lack of liquidity Insufficient cash to cover death costs & obligations may lead to involuntary sale of family business
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5 ! Improper use of vehicles of transfer Pass property to unintended beneficiaries or to proper beneficiaries in improper time or manner e.g. spendthrift spouses or minors cannot legally handle large sum of money or deal directly with real estate or security ! Disabilities Loss of income due to disability with massive financial drain caused by illness threatens the family financial security and quickly diminishes value of estate
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! Probate estate all your property that can be transferred by your will (or intestate laws if you have no valid will). ! Gross estate all your property subject to estate taxes at your death, both probate and nonprobate. ! Nonprobate estate
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This note was uploaded on 03/17/2009 for the course AF 3152 taught by Professor Peggy during the Spring '09 term at Hong Kong Polytechnic University.

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CC3152_L12_ch15+ - ESTATE PLANNING CC3152 Principles of...

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