Estate Planning

What are the different types of taxes within the tax transfer system?

1. Gift tax 2. Estate tax 3. Generation-skipping transfer tax 4. Qualified domestic trust taxation

Indefeasibly Vested Remainder

A vested absolute right to receive the entire property at some future time after the present interest ceases.

Will

A will is a legal instrument whereby a person makes disposition of his or her property to take effect after death.

5 Elements of a Trust

1. Creator 2. Trustee 3. Property 4. Beneficiaries 5. Terms of the trust (generally in a written document)

Distinguish Ethics and Compliance

1. Ethical choices are supposed to be freely chosen in a way that compliance (or legally compelled) choices are not. 2. Just as ethical actions should not be chosen out of fear of the consequences, they should also not be chosen solely for the hope of additional gain or reward. 3. (Plato) It is not appropriate to treat ethical behavior as a mere means to another goal. To treat ethical behavior as a mere strategy for promoting one's self interest is to miss the point.

Estate Planning Team

1. Financial Planner 2. Attorney 3. Bank Trust Officer 4. Insurance Professional 5. Accountant 6. Investment Councelor

How does jointly owned property with rights of survivorship differ from a tenancy by the entirety with regard to a: 1. Sale of the property during lifetime. 2. Gift to a third person. 3. Transfer on the death of one of the tenants?

1. Joint tenants can sell their interests during lifetime to third parties. This action generally severs the joint tenancy, causing partitioning of the property. Tenants by the entireties may transfer their interests only with the consent of the spouse-cotenant. 2. See answer (a) above. 3. Under both forms of ownership, the property transfers by right of survivorship to the survivor at the death of one of the tenants.

Charitable Trust Characteristics

1. Several similar elements of a regular trust. There is the normal requirement that the trust creator have an intention to create the trust and transfer the Trusts, property to the trust. The legal title to the trust property is held by the trustee, who administers the trust according to the trust terms. 2. Charitable purposes include governmental improvement, advancement of religion, educational or scientific advancement, relief of poverty, and other purposes of community advancement. 3. The terms of a charitable trust must not provide a benefit for a definite individual among the class of potential beneficiaries. However, the charitable trust must have a definite class of beneficiaries. For example, a charitable trust could be created to fund estate planning research at The American College. However, it is not permissible to create a charitable trust to fund a travel budget for your favorite estate planning professor. 3. No rule against perpetuities

Irrevocable Trust Non Tax Advantages

1. The grantor can establish the trust to manage property for a needy dependent. The trustee in this arrangement can provide a valuable service to the grantor. That is, the beneficiary has to deal with the trustee rather than the grantor for the needed funds. This can prevent a continuing undesirable conflict between the grantor and the dependent. 2. The trustee may possess investment and accumulation skills not held by the grantor to manage the trust property. 3. The trust property avoids probate at the death of the grantor. • 4. The trust property provides for the beneficiaries and is not subject to claims of the grantor's creditors. 5. The trust may be designed to shelter assets of the grantor from spousal-election rights at the grantor's death. Therefore, the grantor can be assured that children from a former marriage will be provided for at the grantor's death.

Advantages of Revocable Trust

1. The grantor may not have the ability or time to manage the property to the maximum benefit of the beneficiaries. 2. The grantor may be able to enjoy the psychological benefits of gifting property in trust for the trust beneficiaries while retaining the ability to reclaim the property. 3. The grantor has the ability to observe the operation of the trust under the current trustee. This also gives the trustee the opportunity to become familiar with the grantor's dispositive intentions before the trust becomes irrevocable. 4. The revocable trust becomes irrevocable at the death of the grantor and passes by operation of law to the beneficiary. This avoids probate costs and provides for a transfer with less publicity. 5. Ancillary jurisdiction for out-of-state property can be avoided if the grantor's out-of state intangibles are transferred to revocable trusts in the grantor's state of domicile. 6. A grantor who is a sole proprietor of, or partner in, an ongoing business may transfer the business to a revocable trust to avoid termination of the business at the grantor's death.

Ethical principals are needed to accomplish what 3 tasks?

1. To govern behavior which is not appropriately regulated by the law. 2. To supplement legal condemnation with moral disapproval. 3. To encourage behavior that goes beyond what the law requires.

Explain the ramifications of having each of the following types of property owned jointly with right of survivorship: 1. Bank accounts 2. Government savings bonds 3. Securities.

1. With a joint bank account, each joint owner owns a proportionate part of the account balance and is entitled to receive one-half of the interest income. There is no gift if a person uses personal funds to open a joint bank account. A gift is considered to have been made only when the other joint owner (the donee) makes withdrawals. 2. When government bonds are held in joint ownership with right of survivorship, there is no gift when the savings bond is purchased because the joint owner who contributed the funds can cash the bond in at any time and get his or her money back. A gift occurs only when the other joint tenant (the donee) redeems the bond and retains a greater share of the proceeds than he or she contributed to the purchase price. 3. If securities are registered in the names of the co-owners as joint tenants with right of survivorship, a gift occurs from the contributing joint tenant to the donee-joint tenant when the securities are transferred to or purchased for the account. The results are not the same, however, if the securities are registered in street name; no gift occurs when a joint street-name account is created even if one of the joint tenants furnishes more than one-half of the consideration. A gift occurs only when the other party withdraws more than his or her proportionate amount from the account.

Estate for Term of Years

An interest in property established for a specific duration. It may extend beyond the lifetime of the tenant. The important thing to remember is that it is a right to possess and enjoy property as an owner for a definite period of time. If the tenant dies before the end of the term of years, the right to possess the property for the remainder of the term will be determined by the tenant's will or the laws of intestacy. However, the tenant in possession of an estate for a term of years does not have the right to transfer the property at the end of the term of his or her property interest

Fee Simple Estate (Estate in Fee Absolute)

An interest that belongs absolutely to an individual. It is potentially infinite in time. Most individually owned property falls into this category.

Estate in Fee Absolute

An interest that belongs absolutely to the estate owner, the heirs, and assigns forever without condition or limitation.

Tangible Personal Property

Anything that can be touched, seen, and felt. The property actually represents itself and is the actual object.

Trust

A legal relationship in which one acts in a fiduciary capacity with respect to the property of another.

Donee of the Power

A power of appointment is an interest held in property by an individual known as the holder.

General Power of Appointment

A power of appointment that gives the donee a right at any time to designate the property to parties that include the donee or the donee's estate or creditors.

Remainder Interest

A present right to future enjoyment as distinguished from a present interest in property that gives an absolute, immediate right to use and enjoy the property.

Life Estate

A property interest for the life of the estate owner with certain limitations on the life tenant's use of the property.

To what extent does a valid will displace the statutes of intestate succession?

A valid will largely—but not entirely—displaces the statutes of intestate succession. In order to avoid the financial dependence of the deceased's spouse and minor children on the state, most states have either common-law rules or statutory provisions that protect a portion of the deceased's property for a surviving spouse, regardless of the provisions in the will. Although such laws vary from state-to-state, they are all a form of intestate succession.

What are the advantages and disadvantages of owning property jointly with right of survivorship?

ADVANTAGES: 1. Joint ownership is convenient for certain types of assets because either tenant has access to the account. 2. Joint ownership may offer one or both of the tenants a feeling of security, especially if the owners are spouses and one of them has contributed most of the funds. • 3. When one tenant dies, property passes directly to the other tenant without probate delay and with little or no administrative or transfer cost. 4. In many states, joint property ownership between spouses passes free of state death taxes. 5. Since such property passes by operation of law and not under a will, it is not subject to public scrutiny. DISADVANTAGES: 1. At the creation of some of these types of property ownership interests, there are potential gift taxes. 2. There may be additional federal estate taxation. 3. The survivor will gain full control of the property and can dispose of it in any way he or she desires. The decedent-tenant, therefore, loses all control of the property. 4. Under most state laws, property owned as joint tenants with right of survivorship can be reached by creditors of an individual account.

How does Blum define vocation? Why is the financial services industry a vocation?

According to Lawrence Blum, the concept of a vocation includes a designated purpose within society. Vocation carries with it certain values, standards, and ideals. The financial services industry is a vocation insofar as it serves society by helping people protect against risk, efficiently allocate resources, and promote their future financial security.

Why is it important for an estate plan to be revised periodically?

An estate plan should be revised periodically to ensure that it keeps pace with the estate owner's most recent intentions. For example, the birth of new children or grandchildren, a family member's illness or disability, shifts in the estate owner's objectives, or changes in tax laws are all reasons to review the estate plan and make sure that it continues to meet the estate owner's goals.

Forced heirship

An estate-planning mechanism found in most civil law societies, which splits the estate into a forced estate portion and a discretionary estate portion.

Estate

An interest in land that "is or may become possessory" or "ownership measured in terms of duration." Today, estates in property refer to personal property as well as real property.

Trust Situs

Because a trust can be established anywhere, the grantor has some flexibility in establishing a situs for the trust. It need not be the grantor's domicile. A trust generally can be established subject to the laws of another state by stating that fact in the instrument. There may be tax or other advantages to setting up a trust outside of the grantor's domicile.

Why should the estate planner in a common-law state have a working understanding of community-property laws?

Because of the increasing mobility of today's families, estate planners need to understand the legalities in both common-law and community-property states even if their practice is in a common-law state. Changing domicile or moving from one jurisdiction to another can complicate clients' property ownership issues and pose estate planning problems. Planners need to be aware that legal agreements drafted in one jurisdiction may not be effective in the current jurisdiction.

Living Trust

Created and operates before the death of the settlor.

Testamentary Trust

Created under the will of a testator. As such, it is never irrevocable until the testator's death or permanent legal incapacity.

Revocable Living Trust

Created when the grantor transfers the trust property to the trustee but reserves the power to alter or terminate the arrangement and reclaim the trust property.

Charitable Trust Cy Pres

Developed to prevent the failure of trusts that cannot be applied to their original charitable purpose. The court attempts to find another charitable purpose similar to the initial charitable intention of the trust settlor. Cy pres may be applied when the initial charitable trust does not provide enough property to meet its purpose, or when the trust purpose has already been accomplished or becomes impossible, and additional funds remain in the trust.

Differentiate between domicile and situs, indicating the steps an individual can take to establish domicile.

Domicile is the place that individuals consider to be their permanent residence and to which they intend to return if they temporarily leave. Situs is the place where property is located. Some indications of an individual's intent to establish domicile are as follows: voter registration, automobile registration, driver's license, passport, location of a bank account or safe-deposit box, situs of a principal residence, reference to domicile in a will, address listed with the Social Security Administration, and payment of property and income taxes. In certain states, there is a special form to file as a declaration of domicile to establish primary residence.

Equitable Apportionment

Each bequest bears the tax it generates. For instance, if a beneficiary receives 15 percent of the taxable estate, the beneficiary is responsible for 15 percent of the death taxes.

Intestate Succession Statutes

Each state legislature has drafted a statutory plan that clearly lays out the way in which the property one owns at death will be distributed if the decedent dies without a valid will.

Property

Encompasses anything capable of being owned. It includes actual outright ownership of material objects as well as a right to possess, enjoy, use, consume, or transfer something.

Estate Planning

Encompasses the accumulation, conservation, management, and distribution of an estate.

What does the term "Estate Planning" encompass?

Estate planning is the accumulation, conservation, management, and distribution of an estate.

Tenancy by Entirety

Exists only during marriage and will be terminated upon divorce of the spouses. It is limited to co-ownership of property held by a husband and wife.

Which individuals and organizations typically cannot inherit through intestate succession?

Friends and charitable organizations typically cannot inherit any of the deceased's property through intestate succession.

Distinguish between separate property and community property in a community-property state.

Generally, property acquired by a husband and wife during their marriage belongs to them both in equal shares; it is community property. Property that can be proven to belong to a spouse separately is separate property. It may not be sufficient to rebut the community-property assumptions by simply having certain property titled in one spouse's name or acquired with one spouse's separate funds. The facts and circumstances concerning the property's use and the spouses' conduct toward the property may carry more evidentiary weight in determining ownership.

Life Estate (2)

Gives the owner the absolute right to possess, enjoy, or derive income from the property for the span of the measuring life, at which time the interest terminates.

Why is the form of property ownership an important consideration in estate planning?

The form of property ownership is an important consideration in estate planning because it often predetermines the estate tax liability and even the ultimate ownership of that asset upon the asset owner's death.

Gloria Gershwin was domiciled in Alabama. She also owned real property in Florida, tangible personal property in New Hampshire, and intangible personal property in Texas. Which states have an interest in taxing these various properties at her death?

Gloria's state of domicile, Alabama, would have a right to tax all her property except the real estate located in Florida. Since real estate is always taxed in the state where it is located, the state of Florida has the right to tax real estate located there. Her tangible personal property may be taxed by the state where taxable situs exists. This means New Hampshire may have jurisdiction to tax the personal property located there. The intangible personal property is subject to tax by the domiciliary state, Alabama. Texas may also tax her intangible personal property, unless Texas exempts the intangible personal property of a nonresident from taxation.

Intangible Personal Property

Has no intrinsic value.

Charitable Trust

Have a long history of development under the common law of England and are valid under the laws of all states of the United States. In a later chapter, we will discuss the estate planning uses for specific types of charitable trusts. However, it is probably true that most gifts in trusts to charity are motivated by benevolent rather than tax-saving objectives.

Trustee

Holder of the legal title.

Non-Qualified Joint Interests

If a third party (non-spouse) is a joint tenant, all of the joint interests are such.

Irrevocable Trust

In this case, the property is transferred to the trust permanently, and the grantor cannot terminate the trust and reclaim the property before the trust terminates by its terms.

What principles do the intestacy statutes follow in the statutory distribution of a decedent's property?

Intestacy statutes follow a standardized line of succession that controls who will succeed to ownership of a deceased person's property. The statutes are based on spousal and blood relationships to the decedent, rather than on the decedent's intentions or desires.

Irrevocable Trust Tax Advantages

Irrevocable trusts provide tax advantages, such as estate reduction and income shifting. Unfortunately, transfers to an irrevocable trust are completed gifts and may result in gift tax liability to the grantor.

Digital Asset

Property that is held only online. Does not include digital storage devices like computers, phones, and flash drives. Instead, the term describes the valuable property you have stored on those devices.

What kinds of property are characterized as separate property?

Property that was acquired during marriage by one spouse as a gift, by inheritance, as a result of a judgment award for personal injuries, or from purchase with a spouse's separate money or credit retains its separate identity.

What provisions in a will or trust are sometimes overlooked?

The following provisions are often overlooked in an estate plan, will, or trust: guardianship, simultaneous death, the residuary estate, tax apportionment, and contingent beneficiaries.

Assume John gives Sally the absolute right to use his beach house for her life. Upon Sally's death, all rights in the beach house will be returned to John or his estate. What type of property interests do John and Sally each have?

John has a reversionary interest and Sally has a life estate.

JTWROS

Joint ownership interest that gives the surviving owner a non-probate right to the deceased owner's share by operation of law. When one owner dies, his or her share of the property passes in equal shares to the other surviving joint-owners.

Real Property

Land and anything on the land that has been permanently attached or affixed to it.

Explain how psychological impediments may be a barrier to proper estate planning.

Many people are afraid to deal with the fact of their own mortality or are so overwhelmed by the magnitude of estate planning that they delay the process. Inability to confront their own mortality and procrastination are both impediments to proper estate planning.

Why are medical expense insurance and disability income insurance important concerns in estate planning?

Medical expense insurance and disability income insurance are important concerns in estate planning because the costs of a protracted period of disability or a prolonged illness may erode an estate to the point that there will be nothing—except debt—to leave beneficiaries.

Define moral imagination and explain its role in ethical decision making.

Moral imagination allows us to speculate as to how the possible consequences of our decisions will affect other people, both in the short term and the long term.

Describe moral perception and explain its role in ethical decision making.

Moral perception allows us to determine when a situation may require an ethical response.

Commingling

Occurs when properties of different characters are mixed, blended, and jumbled up. In these situations, the community presumption typically prevails over the parties' conflicting claims.

Spendthrift Provision

Prevent beneficiaries from using their trust interest as security for a loan or from selling the beneficial future interest in the property. All jurisdictions, however, enforce beneficiary predistribution agreements to transfer property passing under a will or from a trust to creditors when it is received by the beneficiary. Clearly, once trust income or principal has been distributed to a beneficiary, the interest is accessible to creditors.

Why do professionals take on additional ethical responsibilities?

Professionals take on additional ethical responsibilities for the following reasons: 1. Professionals possess expert knowledge, which enables their clients to depend upon them for reliable guidance. 2. Professionals undertake their role as an expert adviser on a voluntary basis.

Community-Property

Property interests acquired during marriage are presumed to be owned equally by spouses. The community-property principle recognizes the existence of community ownership of property by husband and wife. In essence, each spouse is deemed to own a one-half interest in property acquired during the marriage regardless of which spouse actually acquired, earned, gained, or is otherwise responsible for ownership of the property

Tenancy in Common

Property owned concurrently by two or more persons who may be, but are not necessarily, related.

Situs

Refers to the place where property is located or kept.

Rule Against Perpetuities

Regulated the creation of future interests in trusts and requires that for the trust to be valid, an interest in property has to take effect within a prescribed time period. Historically, the rule against perpetuities is a common-law rule providing that no interest in property is valid unless the interest must vest (take effect) no later than 21 years plus 9 months (in the case of a posthumous child, the period of gestation) after some life or lives in being (after the life of a named living person) when the interest was created. Example: Pg. 131

Describe the best way for overcoming the general presumption favoring community property.

The best way to overcome the general presumption favoring community property is for married partners who reside in or move in and out of community-property states to keep complete, organized, and accurate records of their personal financial matters.

Grantor

The creator of the trust is the one who intentionally causes the trust to come into existence. Trust Concept Pg. 127

How is inflation an impediment to effective estate planning?

The effects of inflation will have a direct impact on an estate. As the value of the dollar is eroded, the adequacy of the estate diminishes. Failure to take inflation into account when projecting the adequacy of an estate 10 to 30 years in the future will probably make it impossible to carry out the estate owner's intentions.

Qualified Joint Interest

Spousal joint tenancies with right of survivorship and tenancies by the entireties.

Rule Against Accumulations

States the period during which income may accumulate. It was enacted using the same principle as the rule against perpetuities, and, in most cases, the permissible period during which the interest must vest is the same as under the rule against perpetuities. There are a few states that have shortened the period for accumulations. Certain states permit accumulations today only for charitable purposes or during a child's minority.

What rights does a co-owner of property held as tenants in common have with respect to: 1. Selling one's interest to a third party. 2. Giving it away to a third party 3. Leaving it to beneficiaries at death?

Subject to the terms of the tenancy-in-common agreement, if applicable, a co-owner of property held as tenants in common has the following rights: 1. Each co-owner is free to sell his or her interest to whomever the tenant wishes without the consent or knowledge of the other co-owners. 2. Each co-owner can give away his or her interest to a third party without the other co-owner's consent or knowledge. 3. Through the co-owner's will, each co-owner can freely dispose of his or her interest to beneficiaries at the co-owner's death.

Explain why tax planning objectives should be subordinate to the primary objectives of estate planning.

Tax relief should not be the primary objective of estate planning. A plan that reduces the client's tax liability to zero but does not meet his or her personal objectives is a poor plan and a disservice to the client. The best estate plan reflects the client's wishes, needs, and objectives and reduces the potential tax liability to the lowest possible level.

Exercise of Power

The act of designating the property by the donee. Failure to exercise power is known as a lapse of power.

Tax Bracket Creep

The adverse effect of inflation pushing individual income and wealth levels into higher tax brackets.

Identify the factors that are important in assessing an estate's liquidity needs.

The four factors that are important in assessing an estate's liquidity needs are (1) the amount and terms of the estate owner's debt, (2) the projected estate tax liability, (3) the type of assets in the estate, and (4) the marital status of the testator.

Transmutation

The legal term for voluntarily changing the nature of property.

Explain what is meant by the real value of intangible personal property.

The real value of intangibles is in excess of the value of the physical object that represents the property. The representation can be touched and felt, but it is not the thing itself. Some examples are stock certificates, leases, mortgages, bonds, and other such representations of property ownership.

Appointees

The recipients of the property after the donee exercises the power.

Escheat

The reversion of property to the state, or (in feudal law) to a lord, on the owner's dying without legal heirs.

List the six ethical principles which follow from the application of the Professional Pledge. Can you think of additional principles which should apply?

The six ethical principles which follow from the application of the Professional Pledge are as follows: 1. Integrity 2. Objectivity 3. Fairness 4. Competence 5. Diligence 6. Confidentiality

Describe the stages in the estate planning process.

The stages in the estate planning process are as follows: 1. Data is obtained. 2. The existing estate plan is evaluated for potential impediments. 3. The plan is designed, reviewed, and approved by the client. 4. The plan is implemented. 5. The plan is reviewed periodically to make sure it continues to meet the client's objectives as they evolve.

There are many types of estates and interests in real property. In each of the following instances, state briefly the type of estate or interest in real property that is created: 1. Alex grants land to Ben and his heirs forever. 2. Alex grants land to Ben for life and, upon Ben's death, to Chris and his heirs forever. 3. Alex gives Ben the right to use his land for 10 years.

The type of estate or real property that is created is as follows: 1. A fee simple estate 2. A life estate to Ben and a remainder interest to Chris 3. An interest for a term of years

Identify the various types of professionals on the estate planning team, and explain how their respective functions complement one another.

The types of professionals who make up the estate planning team are as follows: an attorney, an insurance specialist, a bank trust officer, an accountant, an investment specialist, and a financial planner. Their respective functions complement on another by enabling the client to achieve total financial planning. Combining the expertise of advisors in a variety of disciplines offers comprehensive solutions to the client's personal, business, and financial concerns.

Explain why the transfer tax results between community- and non-community-property states would be similar when the surviving spouse is the beneficiary of the decedent spouse's estate.

The unlimited marital estate and gift tax deduction serves to equalize the transfer tax results between community- and non-community-property states when the surviving spouse is the beneficiary of the decedent spouse's estate. If someone other than the surviving spouse is the recipient of the decedent's property, transfer tax differences are more likely.

Identify the community-property states.

There are nine community-property states. The eight traditional community-property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington. Wisconsin is recognized as the ninth community-property state since its version of the Uniform Marital Property Act, incorporating many community-property concepts, became effective in 1986.

At the death of a cotenant in a tenancy in common, what is the relationship of the cotenant's heirs and the surviving cotenant?

There are no survivorship rights. Each tenant's interest in the property can be left to the tenant's heirs, and the tenant's gross estate will include the fair market value of his or her proportionate interest at death.

Beneficiary

This is the person for whom the trust is created. Beneficiaries hold equitable or beneficial title to the property. The beneficiaries have 4.8 Fundamentals of Estate Planning legally enforceable rights that they may defend and protect in the event that the trust is managed improperly. In addition to primary beneficiaries, contingent beneficiaries also may be named and provided for in a contingent beneficiaries clause. The trust may also provide separately for beneficiaries who are to receive only income and for remainderpersons to whom the trust principal will be released when the trust terminates (or at an earlier time when distributions of principal are permitted). Note that beneficiaries must be legal persons (that is, persons or institutions who can enforce their rights in a court). Pets can be beneficiaries.

Intestate

Without a will.

Time-of-Acquisition / Inception-of-Title rule

This rule provides that the character of an asset, separate or community, is established at the time the asset is acquired, and once established, the character is not altered by later events. So, if prior to a marriage one of the parties acquires property, it is and remains the acquiring spouse's separate property. If during the marriage the property is improved using community funds, the property is still the acquiring spouse's asset, but the non-acquiring spouse may have a right to reimbursement for one-half of the community funds spent on the improvements.

Reversionary Interest

This type of interest occurs when the owner of an estate transfers a lesser estate to another. A reversionary interest gives the owner (grantor) the right to have all or part of the property that he or she originally owned returned to the owner or the owner's estate.

Explain how a person can hold legal title to property but not possess an equitable interest in the property. Give an example of this type of ownership.

Under some circumstances, the legal owner of property (the person who holds legal title to the property) and the equitable owner (the person with the right to beneficial enjoyment of that property) are different parties. An example of this division of ownership is property held in trust. Here, the trustee, who invests and manages trust property, is the party who holds legal title to the trust. The trust beneficiaries, however, hold equitable title to trust property since they are entitled to the income generated by the trustee's efforts.

Trust Terms

Usually, the trust terms are embodied in a written instrument called the trust instrument, deed of trust, or indenture of trust. The trust terms or powers are derived from those specified in the trust instrument as well as from the law of the jurisdiction in which the trust is situated and under which it is governed.

Why is estate liquidity analysis particularly important for a closely held business owner?

When a closely held business is the primary asset and source of income to the decedent and family, the financial consequences to the family when the decedent's salary and bonuses cease can be enormous. With adequate planning, salary continuation plans, retirement plans, and life insurance proceeds can ease the financial burden and provide liquidity.

What is the difference between self-interest and selfishness?

While it is important and natural for people to look out for their own interests (self-interest), if we pursue our self-interest at the expense of another, we go too far and are selfish.

What guidelines are available to the estate planner in determining whether an activity may constitute the unauthorized practice of law?

While there are activities that are universally recognized as the practice of law (drafting legal documents, for example) and, therefore, must be practiced only by lawyers, there are other areas that are not as clearly defined. An example is giving advice about taxation of a trust arrangement. Is that advice solely within the province of an attorney, or can a trust officer give such advice? As a guideline, if the advice is generally informational, giving it does not constitute the unauthorized practice of law. Even if the advice specifically relates to a client's situation, there is no unauthorized use if it is given on a settled area of the law that is common knowledge in estate planning. Nevertheless, because this issue is complex, it is wise to involve an attorney in the estate planning process as early as possible.

Domicile

the place individuals consider to be their permanent residence and to which they intend to return if they have temporarily left. Individuals may have personal residences in more than one state.