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In this lesson, we’ll discuss the steps you should follow in putting together an estate plan that meets your goals and also warn you about dangerous misconceptions. You will discover how estate planning can enable you to manage your investments more profitably, learn key facts about wills and trusts etc.

What is Estate Planning?

If you have possessions, you have an estate, their orderly care during your lifetime represents financial management. Their disposition after your lifetime is called estate settlement. Deciding in advance how this will be done is known as estate planning. Anticipating, arranging, during a person’s life, the management, disposal of that person’s estate during his life, in the event the person becomes incapacitated and after death.

Setting your estate planning goals.


It involves a generous measure of financial management during your lifetimeso you won’t  assume that estate planning has nothing to do with you personally, except to see that yourproperty is taken care of when you’re gone.

Your family.

 If you’re married, you and your spouse should decide how your assets will be administered for the maximum advantage of the survivor. When you are gone, your spouse will face new and heavy burdens.

Your philanthropic interests.

Don’t overlook worthy causes that advance education, maintain excellence in health care, provide care for less fortunate individuals, and support religious and social service organizations in which you are interested.

What’s a Will?

A will is a legal document that transfers some of the assets held in your individual name to your beneficiaries when you pass away. It also names the executor whom you want to carry out the terms of the will and a guardian for any minor children.

Making It Valid

To create a valid will, you must be of sound mind and legal age. Even if you’re incompetent, you may at times have lucid moments when a valid will can be executed. A will made under threatening circumstances (“Sign this or else!”), however, can be invalidated.

Choosing Your Executor

This is a crucial decision that you should start thinking about early in the planning stage. From the standpoint of your beneficiaries, on-the-job training of an executor can be a costly and unhappy experience.

What’s a Trust?

This is an agreement by which a person appoints someone to carry out specific or generalized services of financial management. Those establishing a trust and providing the initial assets are called grantors.

 Types of Trust

 Bypass trust.

You can create a trust in your will—known as a testamentary trust—for the benefit of your spouse, children or others you select. With this type of trust, you direct the trustee to pay the income to or for the benefit of the people you name.

Living trust.

You might decide to create a trust for your own benefit—a trust that will remain operative while you are living. In this case, you direct the trustee to look after the trust assets, pay you the income and counsel you about the investments.

Charitable remainder trust.

You can set up a trust to pay income to yourself or someone else you choose for lifewith the remainder going to a favorite charitable organization. The organization won’t receive any benefits until after your lifetime (or after the lifetime of your spouse or other income beneficiary named by you.)

How a Trust Gives Protection

If you create a trust, you may be motivated by a desire to protect the trust beneficiary, preserve the trust assets or both. If you make yourself the initial income beneficiary of a living trust, more than likely you do so because you want to provide for future needs.

Know the Gifts That Give Back

Many people underestimate the extent of their wealth. Without an inventory of your assets and personal property, you may not realize how much you have to give away. Your children may no longer need as much financial help as you are capable of giving. Perhaps there are charitable causes you would like to support in order to leave a legacy and perpetuate your values. You could, of course, include a gift in your will. There are other ways, however, to make contributions that promise lifetime benefits.

 Six Ways to Donate

1. Simplify Your Giving

A donor advised fund is a type of account you set up with the charitable arms of investment firms or a sponsoring nonprofit organization, like many community foundations. With a donor advised fund, you avoid the cost and complexities of managing a private foundation.

2. A Gift That Pays You Back

The charitable gift annuity pays you a fixed amount for life. You make a gift of money or securities to the charity of your choice, which then agrees to pay you a set amount for life. (The charitable gift annuity option isn’t available in a few states or from some organizations.)

3. A Gift That Pays You Back in the Future

Instead of securing an immediate payment under a gift annuity, you can have it deferred until a later date, such as the date of your retirement. You make the contribution now, qualifying for an income tax charitable deduction. The charity agrees to pay you a set income for life, starting at any date you choose.

4. Donate Your Home and Keep the Keys

You can live in your home but give it to a charity and receive a charitable deduction. This arrangement is technically called a gift of a remainder interest in property. In essence, you retain a life estate.

5. Give Through a Trust and Receive Income

When you create a charitable remainder trust, you can choose from two types: an annuity trust or a unitrust.

6. Lead Trust

As previously explained, you can arrange a gift of income-producing property to a selected charitable organization while reserving a life income and taking an income tax deduction for a portion of your contributions. You can also reverse the process; that is, you can give income to a charity for several years and provide that the trust’s balance will then go to your children and/or grandchildren.

Get professional assistance.

As there are legal requirement binding the validity of each document, it is very essential you get expert legal help. 

DISCLAIMER: The information provided in this blog is for informational purposes only and should not be considered legal advice. The content of this blog may not reflect the most current legal developments. No attorney-client relationship is formed by reading this blog or contacting Morgan Legal Group.

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