CHAPTER 2Estate Planning

What Is Estate Planning?

Estate planning is the process of controlling your assets, both during your life and after your death, with three primary objectives in mind. First, you want to ensure that your assets will always be sufficient to provide for you and your family's lifestyle needs. Second, you want to make certain that your assets go to the people and/or organizations of your choosing. Finally, you want to minimize the amount of taxes, fees, and court interference associated with settling your estate. This definition is broad, as well it should be. A properly designed estate plan encompasses the landscape of financial issues.

Investment Planning

Your investment plan should focus on providing enough assets to meet your retirement needs, the cost of funding your children's education, and expenses such as financial assistance for elderly parents. It should be designed so that your expected long‐term returns will meet your financial objectives. Your risk tolerance should be examined to ensure that your portfolio is not too aggressive for your personality.

Tax Planning

As you're managing all your finances, you should pay close attention to tax efficiency. Consider the following question: How can you best use tax‐deferred or tax‐free investment vehicles? Are there ways to accomplish some of your goals by shifting income from yourself to another family member who is in a lower tax bracket? Can you make a gift to a charity in such a way that you ...

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