Quiz 15: Preserving Your Estate
It is essential for Mr. D and Mrs. C to draft a will as early as possible. The importance of having a will is explained below- a. As all their children are minor having a will would help in securing their future in the uncertain death of both the parents. Through a will the responsibility of the children along with the share of estate to meet the expenses can be assured. b. Through a will the disposition of the estate can be determined. In the absence of a will the owners would not be able to transfer anything to a person not covered as descendants under a statute. c. The right to select a representative to guide the disposition process is lost. d. Estate planning to reduce taxes is not possible in the absence of will.
The executor is the legal representative of the decedent and takes care of the settlement process of the estate. The process involves realization of the assets, collection from banks and paying off the debt and distributing the balance as per the will. No qualification is required to be an executor, however and executor must be clearly aware of the affairs of the decedent and must be efficiently responsible to perform the job. The role of executor must be only accepted if the details of the affairs of your friend are known and that you will be in a position to perform the responsibilities of the settlement and give the required time. Based on the above criteria the role may be accepted.
A trust is a legal arrangement where one party (grantor) transfers the estate to the second party (trustee) for the benefit of the third party (beneficiary). Mr. G and Mrs. R may use a trust for the following advantages- a. The trust would enable them to significantly reduce the income tax and the estate taxes. b. The trust enables in conserving the property for a long period of time. c. As the family includes children in case of death of both parents the expenses of the children can be taken care by the trustee through the income from estate. Mr. G and Mrs. R should create a revocable trust and provide in their will for the following for the benefit of the family- a. The trustee to ensure that all the expenses of the children are met from the estate. b. The estate to be transferred on the children attaining majority in equal share.