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Home page > Estate Planning > Estate Planning
An Approach to Estate Planning
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A good estate plan can only be created in recognition of one’s personal circumstances, both family and financial. When working with a professional advisor, consider the following as the tenets of sound estate planning:
- Full disclosure of all assets and liabilities;
- Full disclosure of one’s needs and objectives, particularly regarding family members - how one feels about their requirements, their strengths and weaknesses, their potentials and goals;
- Full disclosure of any existing estate plan;
- Full and open communication with the professional advisor concerning the existing plan’s merits and disadvantages, the prospects for improving or replacing it, and the consequences of the various choices.
It is natural to feel a certain reluctance when speaking of these matters with a stranger. We may fear a breach of confidence; we may have emotional difficulties in examining our attitudes towards family members; we may have pre-conceived notions about the estate planner’s role in the process; we may be concerned about the legitimacy and viability of different tax planning strategies. And there is always the reluctance to consider the consequences of one’s own mortality.
There must be a degree of trust and understanding if the inevitable reticences are to be overcome. The following are some thoughts that may prove helpful.
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| If "estate planning" smacks too much of death, "financial planning " might be a better description. Consider that building, preserving, and transferring wealth and property are key objectives in the planning process. Remember that proper planning can help ensure that the needs of heirs are met.
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| Foremost are the lost opportunities for tax savings. One needs to know about the concept of deemed disposition at death.
Be prepared. Direct, straight out discussions about handicapped children, the marital status and sexual orientation of children, divorces, separations, estrangements, intra-family jealousies and resentments, etc., may be uncomfortable but are necessary to ensure your wishes are reflected in your plan. Be aware that seemingly irrelevent matters may be pertinent to the estate plan.
Similarly, a surviving spouse’s possible remarriage need be considered, in the context of the provisions for a spousal trust and the support of dependent children.
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| Be realistic when agreeing upon the value of the assets of your estate. Consider fair market value, not cost or book value in the case of investments. If a business interest is involved, an an accountant’s or auditor’s valuation may be requested. If insurance values are sought, an agent or broker, or the insurance company itself may be required to supply the answers.
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A little knowledge can be a dangerous thing. It’s true in estate planning as it is elsewhere. Beware of pre-conceived notions such as:
- one should always seek to avoid probate, where possible;
- making lifetime gifts to children cannot hurt;
- designating a beneficiary of a life insurance policy is always a good idea;
- joint ownership is the preferred way of transferring property at death; and
- the only reason you might establish a trust for your spouse or other family member is if they are unable to manage the funds.
Keep an open mind on these points when designing your plan. Your estate planner will be only too happy to acquaint you with the facts regarding these and similar issues...
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| A good estate planner will consider it his or her duty to remind one of the long-term perspective of an estate plan, even to the point of admonishing against provisions that arise from ad hoc, transitory or emotional judgements regarding inheritances.
A hasty and ill-considered estate plan can have severe and long-term effects on family relations; it may even lead the excluded child to bring a dependant’s relief claim against the parent’s estate.
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| A questionnaire might be worthwhile in organizing your thoughts and concerns regarding the planning of your estate. It can be done either before, as a part of, or after the planning process with your advisor. The questionnaire should not address sensitive personal matters or issues requiring special handling - these matters are best left to direct discussion with your planner..
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