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Lessons from Paul Walker's Lack of Estate Planning

mjtfernandez · 6 · 1749

mjtfernandez

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We've heard news about how the lack of proper estate planning has affected the lives of the minors and the heirs. One of the recent was the case of Paul Walker who died in a mess without a proper estate plan.

Once you've assessed your need for an estate plan and your financial advisor has recommended to you (or you have selected) an attorney to work with, you'll need to create your foundational estate plan. Depending on your current family situation and financial status, your foundational estate plan will consist of four or five essential documents. In order to put these essential documents together, there will be things that you'll need to do and many important decisions that you'll need to make. You together with your financial advisor and your lawyer can help you create a good estate plan. Here's a list of what they are.


1. Assemble a list of your current assets and liabilities.
This will help your estate planning attorney calculate your current net worth and determine if you already have or could potentially have a taxable estate. Your list of assets and liabilities will also indicate if your loved ones will have any difficulty paying the estate tax and/or other debts after your death. If your attorney sees a problem, he or she can suggest options for easing the financial burdens that your loved ones will face during a difficult time. Your list of assets will also help to identify if there are any problems with how your property is titled and what accounts will need a change of beneficiary to coincide with your foundational estate plan among others.

2. Determine who will receive your assets.
Having an estate plan gives you the flexibility on who to give your assets upon your demise. Without a will, the laws of the Philippines on intestate succession will be the basis for the transfer of your assets. Having a will allows you to select careful who is fit to receive the assets based on their interest and their capacity. Having a will also allows you to also give to individuals other than your compulsory heirs such as your spouse and your children.

3. Decide how and when your beneficiaries will receive your assets.
There are basically two ways to leave your assets to your beneficiaries - outright or in trust. Which way you choose will depend on the beneficiary's age, health, and family and financial situations. Your estate planning attorney will walk you through the needs of each beneficiary and then help you decide what to do for each one. If a trust is recommended for a beneficiary, you'll need to determine how long it should continue - for a fixed number of years, until the beneficiary reaches a specific age or achieves a specific goal, or for the beneficiary's entire lifetime. You'll also need to determine what will happen to the assets remaining in the trust if the initial beneficiary dies before the trust funds have been completely used.

Trust funds may either be revocable or irrevocable, funded or unfunded. Unfunded trust funds who receive the funds from the life insurance of the estate owner upon death is called a life insurance trust which is now getting common in the Philippines.


4. Choose someone to be in charge.

This is probably the most important step in creating your foundational estate plan - choosing someone who will act in your best interests if you become disabled, or in your beneficiaries' best interests after you die. This will include selecting an executor of the will and recommending a guardian. Each of the four or five essential estate planning documents will require you to select a fiduciary to act on your behalf either during your lifetime or after your death. Your estate planning attorney will explain the function of each fiduciary and help you decide who to choose in each situation. You'll also need to select one or two backups in case your initial choice isn't able or doesn't want to serve.


freefront

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Reply #1 on: Jan 15, 2014, 04:38 PM
Lower Limit    Upper Limit    Initial Taxation    Further Taxation
0    $10,000    $0    18% of the amount
$10,000    $20,000    $1,800    20% of the excess
$20,000    $40,000    $3,800    22% of the excess
$40,000    $60,000    $8,200    24% of the excess
$60,000    $80,000    $13,000    26% of the excess
$80,000    $100,000    $18,200    28% of the excess
$100,000    $150,000    $23,800    30% of the excess
$150,000    $250,000    $38,800    32% of the excess
$250,000    $500,000    $70,800    34% of the excess
$500,000    $750,000    $155,800    37% of the excess
$750,000    $1,000,000    $248,300    39% of the excess
$1,000,000    and over    $345,800    40% of the excess

^Federal lang yata yan. Idagdag pa ang state tax( have no idea about his native state) baka umabot sa 60-65% ng estate nya yung tax.


mjtfernandez

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Reply #2 on: Jan 16, 2014, 02:32 PM
Lower Limit    Upper Limit    Initial Taxation    Further Taxation
0    $10,000    $0    18% of the amount
$10,000    $20,000    $1,800    20% of the excess
$20,000    $40,000    $3,800    22% of the excess
$40,000    $60,000    $8,200    24% of the excess
$60,000    $80,000    $13,000    26% of the excess
$80,000    $100,000    $18,200    28% of the excess
$100,000    $150,000    $23,800    30% of the excess
$150,000    $250,000    $38,800    32% of the excess
$250,000    $500,000    $70,800    34% of the excess
$500,000    $750,000    $155,800    37% of the excess
$750,000    $1,000,000    $248,300    39% of the excess
$1,000,000    and over    $345,800    40% of the excess

^Federal lang yata yan. Idagdag pa ang state tax( have no idea about his native state) baka umabot sa 60-65% ng estate nya yung tax.

Buti nalang ours is not that big 20% lang max. Pero I am pro for a bigger estate tax para hindi na umasa sa mga parents ang mga anak. It's one form of wealth redistribution also.


freefront

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Reply #3 on: Jan 17, 2014, 12:07 AM
Strongly disagree. If anybody could have accrued that much amount of money by himself, you know for sure that all of income has been taxed going in. Income tax. Capital gains tax- what he has in investments like bonds and MF. He buys property- he's taxed. He buys a car- VAT and road tax and whatever else there is, etc.

I'm more of, tax the extremely affluent ones progressively. Upper middle class to lower middle class---minimize the taxes and get that money flowing for consumerism--->that will drive businesses to thrive and will, in turn, necessitate more job hiring. In our country, I'll definitely find ways for tax avoidance. Rampant corruption will be by secondary reason. Main reason is---how many times can the government collect taxes on every effort I make?


bauer

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Reply #4 on: Jan 17, 2014, 02:16 PM
I'm more of, tax the extremely affluent ones progressively. Upper middle class to lower middle class---minimize the taxes and get that money flowing for consumerism--->that will drive businesses to thrive and will, in turn, necessitate more job hiring. In our country, I'll definitely find ways for tax avoidance. Rampant corruption will be by secondary reason. Main reason is---how many times can the government collect taxes on every effort I make?

I agree with you FE.  But the problem is, how can we "EFFECTIVELY" tax more the affluent if they control our government and big business?

Only the small people are taxed with a huge load. Middle class or poor.


freefront

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Reply #5 on: Jan 17, 2014, 05:28 PM
@bauer- pls. compare the estate tax in the USA with ours. Bear in mind that our extremely affluent count their millions in US dollars.

If the Net Estate is:           
           
Over                 But not Over            The Tax           Plus     Of the Excess Over
                                                         Shall be     
                         P 200,00.00             Exempt     
P200,000.00        500,000.00           0                      5%        P 200,000.00
500,000.00          2,000,000.00        P 15,000.00     8%         500,000.00
2,000,000.00       5,000,000.00       135,000.00       11%        2,000,000.00
5,000,000.00       10,000,000.00     465,000.00       15%         5,000,000.00
10,000,000.00                                 1,215,000.00     20%        10,000,000.00

^^^Maybe exemptions should be as high as 500-1M (what is friggin' 1Million? Like I always say, anybody who owns a lot in Sampaloc on the side of UST is a millionare. That's 35,000/ sq.m. for you and the homeowners are not living the sweet life either). Next bracket would be increments of 5M? Sure, we could go as high as 35-40%, but the figure that would put the ouch in the pocket can maybe start at 500M? But, please, 10 million networth of one person and that's less 20% already? I think that's too much.

So, even if the affluent take steps in wealth management like buying insurance to take care of estate taxes( I know you are not much of a fan of life insurance, but if you see the figures, it is still a lot cheaper than taking a chunk out of your networth for the heirs to pay for estate taxes), they will still be spending money coursed thru' the insurance industry. At best, their financial advisors will be somewhere in middle class. That is one trickle down avenue.

Realistically, how to tax the affluent, thereby influential people, in our beautiful homeland? Sadly, you can still look up to the US model---and that sucks big time,too. Collectively, the influence they wield is strong enough to stop their congress on its tracks. Using dark humor, I guess corruption becomes another trickle down avenue.

When Filipinos who are beneath the upper 10% are done being doormats, that's the time we get to have more spending power. Because we are the majority and we should be the movers. Sobrang matiisin at madaling makalimot lang kasi tayo.

Rebolusyon!!!   :hihi: #here's hoping you have your sense of humor with you. it's becoming a scarce commodity these days.


 


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