1) Define estate planning. List the objectives to accomplish through estate planning.

Estate planning: planning for your eventual death and the passage of your wealth to your heirs. 1) Understanding the importance. 2) Describe the four steps in the estate planning process. 1) Determine the value of your estate. 2) Choose your heirs and decide what they recieve 3) Determine the cas needs of the estate 4) Select and implement your estate planning techniques 4) Explain the annual gift tax exclusion. How is it used as an estate planning tool? You can give money away before you die, without having to pay taxes on it, but with a limit. 5) Explain the importance of having the lifetime gift tax exemption linked to the estate tax exemption. It allows you to give away more money without having to pay taxes. 6) Describe the unlimited marital deduction. What exclusions apply? You can transfer large amounts of money between your account and your spousess account, without there being any taxes on the transfers. The only way you cant do that is if your spouse isnt a US citizen. 9) What is probate and why is it often prudent to take steps to avoid probate? Probate: the legal procedure that establishes the validility of a will an d then distributes the estates assests. So that the people you want to have the money get the money. 10) List five reasons why having a will is important. 1) If you dont have a will, the court will likely choose a relative as the guardian to your childr en under the age of 18 and their property. This relative may or may not be someone you would choose; therefore, it is important to specify in your will a guardian for your children. 2) In the case of children with special needs, a will may be the most apropriate way of providing for those needs. 3) Property that isnt co-owned or in trusts is transferred according to your wishes as expressed in your will. 4) You can make special gifts or bequests through a will. You can even handle the furture care of your pets through a will. 5) If you dont have a will, the court will appoint an administrator to distribute your assets. Not only might this distribution confilict with your desires, but the costs of an administrator for your estate will be more than the cost of drawing up a will, leaving less for your heirs. 11) Describe the basic clauses in a will. What individuals are typically designated in a will? Introductory statement: the introductor statement identifies whose will it is and revokes any prior wills. Parment of debt and taxes clause: this clause directs the payment of any debts, death and funeral expenses, and taxes. Disposition of property clause: this clause of allows for the distribution of mone and property. It states who is to reveive what, and what happens to the remainder of the estate after all the bequests have been honored. Appointment clause: this clause names the executor of the estate and the guardian if there are children under 18. Common disaster clause: the clause identifies which spouse is assumed to have died first in the event that both die simultaneously. Attestation and witness clause: this clause dates and validates the will wish a signing before two or more witnesses. 12) List three characteristics of a valid will. Are handwriten or oral wills acceptable? 1) You must be mentally competent when the will is written. 2) You cant be under undue influence of another person. 3) The will must conform to the laws of the state. 13) Describe the following estate planning douments: (a) Codicil, (b) letter of last instructions, (c) durable power of attorney, (d) living will, and (e) health care proxy. Codicil: an attachment to a will that alters of amends a portion of the will. Letter of Last Instructions: a letter, generally to your surviving spouse, that provides information and directions with respect to the execution of the will. Durable power of attorney: a document that provides for someone to act on your behalf in the event that you beome mentally incapacitated. Living Will: a directive to a physician that allows you to state your wishes regarding medical treatment in the event of an illness of injury that renders you unable to make decisions regarding life support or other measures to extend your life.

Health Care Proxy: a document that designates someone to make life support decisions for you if you lose capacity to decide. 14) What are the roles and duties of an executor? they carry out the provisions of your will and managing your property until the estate is passed onto your heirs. 15) List three strategies for transferring property that will avoid probate. Joint Ownership Gifts Naming Beneficiaries in Contracts--Life insurance and retirement plans Trusts 19) Briefly explain the gifting exceptions that apply to (a) life insurance, (b) medical and educational expense, and (c) charitable gifts. Life Insurance: if its given away within 3 years of the owners death, it is included in the estate for tax purpose s. Medical and Educational Expense: you must pay it directly to the school or the institution providing the services. Charitable Gifts: no taxes, and it even goes on as a tax deductible. 20) What is a trust? Name five possible advantages of using trusts in estate planning. Trust: a legal entity in which some of your property is held for the benefit of another person. 1) Trusts avoid probate 2) Trusts are much more difficult to challenge in court than are wills. 3) Trusts can reduce estate taxes. 4) Trusts allow for professional management. 5) Trusts provide for confidentiality. 6) Trusts can be use to provide for a child with special needs. 7) Trusts can be used to hold money until a child reaches maturity. 8) Trusts can ensure that children from a previous marriage will recieve some inheritance.