Magazine article CMA - the Management Accounting Magazine

Estate Planning: It's Better Now Than Never

Magazine article CMA - the Management Accounting Magazine

Estate Planning: It's Better Now Than Never

Article excerpt

In a nutshell, estate planning involves the distribution of wealth among family members in a tax-effective manner through the transfer of wealth from one generation to another. In a thorough and comprehensive estate plan, one must attempt to minimize or defer tax both during an individual's life and upon death. Saving tax is, however, only one aspect of estate planning. There are many other considerations, including:

* The ability of individuals to maintain control over their wealth during their lifetime,

* The power of individuals to be able to direct the disposition of their property during their life and upon death, and

* The structuring of their affairs and business such that there will be an orderly succession.

Only after individuals have considered both the financial and personal aspects of their situation can they structure an estate plan to minimize and defer taxes. The following estate planning points should be considered:

Does one have an up-to-date will? A will is very important because it serves to direct the distribution of assets after one's death. One should also conduct periodic reviews of the will to ensure that the estate plan reflects the changes both in tax and private law.

Has an executor been selected for the estate? The individuals selected must be familiar with one's personal affairs and have the ability to manage such affairs, or have the right to obtain competent professional assistance.

Who will be the beneficiaries of the estate? The choice of beneficiaries will have an impact on both family relations and upon the future preservation and growth of wealth.

What impact will the estate plan have on one's family? Frequently an estate plan prematurely gives children certain assets or power and control in a corporation that will deprive them of their incentive to work.

Is there a risk that assets may not be passed from one's spouse, upon his or her death, to the children? It is quite common for surviving spouses to remarry after the death of their mates, thereby enabling a stranger to have access to the assets.

What plans are there for the orderly succession of the business? Provision must be made to determine whether the children will inherit the control of the business or whether a third party or business partner will take over.

Has one ascertained the value of the assets, liabilities and expected earning potential? One must be able to determine if there are sufficient funds available to pay the tax liability due upon death.

Does the beneficiary or executor know the location of the assets? …

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