An Estate Planning PrimerWritten by Bill Willard
An estate is total value of everything we own--and business and personal assets can add up quickly. Everyone has an estate. And realize it or not, everyone also has an estate plan. An estate plan can be designed by clients and their professional advisors to achieve client’s personal and financial objectives. Or, it can be an arrangement imposed upon survivors by state intestate succession laws if someone dies with¬out a valid, up-to-date will. Even though a will is most basic estate plan¬ning tool, two out of three Americans die without one. A comprehensive estate plan can arrange ownership, management and distri¬bution of your assets in ways that meet your needs and objectives while mini¬mizing estate shrinkage. Without such a plan, whatever you may think is going to happen to your estate after you're gone probably won't. • Estate settlement and distribution -- Estate transfer is a privilege that can be exercised only by following specific legal procedures designed to protect rights of deceased’s heirs. Estate settlement, as this process is called, involves assigned executor making an inventory of person’s business and personal assets, paying all debts and claims against your estate, identifying legal heirs of remaining estate assets, and distributing those assets accordingly. • The problem of estate shrinkage -- The costs associated with estate settlement include funeral expenses, medical bills, legal fees, administration costs and other debts, as well as various federal or state taxes. These costs can drastically shrink size of your estate. Because they must be paid before estate can be fully settled, they can also delay distribution of your remaining assets to your heirs. • The need for estate liquidity -- Estates are often cash poor. Unless sufficient liquidity has been provided, forced sale of nonliquid assets to pay settlements costs can compound estate shrinkage. In these situations, buyer always has upper hand. But even people of modest means who never considered themselves rich enough to need much estate planning can be in for a shock. In addition to having to settle-up with Uncle Sam and state tax collectors, creditors must be paid in full before a taxpayer's heirs can receive their inheritances. • A false sense of security about estate taxes -- Part of problem may be that people are so concerned about reducing their income taxes, they forget that federal estate tax rate is virtually double income tax rate. Actually, anyone with at least $600,000 in assets has a potential federal estate tax liability and may also face state death taxes. Federal estate tax laws, particularly unlimited marital deduction, have lulled many taxpayers into a false sense of security. Even with a will, anyone who thinks "leaving it all to my spouse" is way to avoid estate taxes and other estate settlement hassles needs to think again. • The marital deduction is an important estate planning tool. It provides that any assets passing to a surviving spouse pass tax free at time first spouse dies (assuming surviving spouse is a U.S. citizen). However, marital deduction ends after first death. Unless surviving spouse remarries, real impact of federal estate tax is felt at sec¬ond death. In fact, bill may even be higher if estate continues to grow.
| | Ethical Finance: Who Benefits From Our Spending?Written by Rachel Lane
On one hand consumers are being universally criticised for running up significant amounts of debt on credit cards, yet conversely many companies are capitalising on growing credit card debt, from charities and political organisations to football clubs, Association of Surgeons and somewhat ironically ActionAid, an international development agency whose aim is to fight poverty worldwide. Financial comparison site moneynet.co.uk provided 226 credit cards in a general credit card search, from which consumer could choose a product to suit their lifestyle, as well as their wallet. Credit cards with charity branding involve many major organisations including Amnesty International, Christian Aid, WaterAid, RSPB, Save The Children, Ramblers Association, Oxfam, Greenpeace, Vegetarian Society, RSPCA, ActionAid, Children In Crisis, Help The Aged, Tearfund and Terence Higgins Trust.
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