1. Chapter 16 In-Class Notes

2. Background on Wills Reasons for having a will Ensures that your estate is distributed in the manner you desire and to the beneficiaries you specify Allows you to appoint a guardian for minor children Provides control over the distribution of any inheritance to minor children and other heirs Creating a valid will Must usually be at least the age of majority (18 or 19) Must be mentally competent Must not be subject to undue influence Common types of wills English form, notarial, holograph 16-2 Copyright © 2009 Pearson Education Canada

3. Key Components of a Will Testator identification Revocation of previous wills Appointment of executor (personal representative) Appointment of guardian for minor children Authorization to pay debts Authorization to make bequests Distribution of residue Administration of the estate Liability Signatures Letter of last instruction 16-3 Copyright © 2009 Pearson Education Canada

4. Estate Taxes At death  a deceased taxpayer is deemed to have disposed of his or her assets Spousal rollover  a mechanism that can be used to delay the payment of tax Determination of tax payable based on: Fair market value (FMV) minus acquisition cost Optional tax returns Rights or things Business income from a partnership or proprietorship Income from a testamentary trust 16-4 Copyright © 2009 Pearson Education Canada

5. Trusts and Contributions Trust: a legal document in which one person, the settlor, transfers assets to a trustee, who manages them for designated beneficiaries Types of trusts Inter vivos trust (revocable or irrevocable) Testamentary trust Contributions to charitable organizations Tax benefit is greater in the year of death and in the year preceding death than it is under other circumstances 16-5 Copyright © 2009 Pearson Education Canada

6. Other Aspects of Estate Planning Living will: A simple legal document in which individuals specify their preferences if they become mentally or physically disabled Limited (non-continuing) power of attorney General power of attorney Enduring (continuing) power of attorney Durable power of attorney for health care 16-6 Copyright © 2009 Pearson Education Canada