The Investment Scientist

Posts Tagged ‘estate planning

ImageI bet you didn’t know that this week, the third week of October, is … drum roll please … National Estate Planning Awareness Week!

Seriously! Congress established it in 2008 in House Resolution 1499.

I only know this after getting an email from my estate planning attorney friend. I think you should read it as well.

According to the resolution passed by Congress, “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.” The resolution goes on to state that “careful planning can greatly assist Americans in preserving assets built over a lifetime for the benefit of family, heirs, or charities.”

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Judge’s gavel

Why do I need an expensive lawyer to do estate planning for me? Why can’t I just write my will on a piece of paper with two people as witnesses?

This is a question I got from a woman who owns 11 properties in 5 different states. Here is how I explained it to her.

It’s a bad idea to write your own will. Each state has its own descent and distribution law that governs the distribution of the estate of the deceased.

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Estate planning

I received a marketing piece from a major CPA firm this morning. Let me tell you what I think about its key points.

Due to the expiration of certain tax provisions, 2012 may be the last year that taxpayers will be able to utilize the gift and estate tax exemption under the Temporary Tax Relief Act of 2010 – an exemption that generally allows taxpayers to exempt up to $5,120,000 from estate and gift taxes.

This is good to know…

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[Guest Post by Anthony S. Carducci

1. Failure to leave any written documentation of your assets, including a list of your online accounts and passwords

2. Failure to let family members know where to find important estate planning documents

3. Failure to name a guardian for minor children or choosing a guardian who lives far away without planning for temporary, local guardianship (solved with a comprehensive Kids Protection Plan®)

4. Failure to name recipients for your personal possessions

5. Failure to designate beneficiaries for retirement and other financial accounts

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[Guest Post by Christopher Guest] Many people I work with to plan their estate want to make some type of charitable gift. Charitable giving through a person’s estate plan falls into three categories: a simple bequest through a will, a charitable remainder trust or a charitable lead trust1. Most people want to make an altruistic donation to some cause that holds a special place in their heart. However, for the more sophisticated estates, charitable giving can be a valuable estate tax planning tool.

The simplest and most popular form of charitable giving is a bequest through a will. Basically, there will be a clause in the will that says “I give X amount of money to charity Y.” If the estate plan is more sophisticated, the bequest could be based on a percentage of the estate’s value or a part of the residue of the estate2. Like all charitable bequests, it is tax deductible.

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Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



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