In the present paper the first question that will be addressed reflects on the three major objectives of Estate Planning: asset protection, wealth accumulation and wealth distribution. Each of the aspects will be dwelt upon separately as it pertains to the situation in which Barry as a single parent with two children aged 7 and 8 years old respectively has found himself in. In other words, estate planning will be considered in the context of its relevance to this particular complex life situation.
First of all, it can be said that Barry does really need to do some estate planning for the sake of his children. Estate planning, above all, means the process of disposal and management of estate belonging to the person. Beyond this estate planning presupposes that estate will be transferred to the heirs without transfer or income tax. It may involve anticipating and arranging costs as well as minimizing or reducing uncertainties that are caused by the probate administration. In any way, estate planning is usually focused around its major objectives and all legal actions of estate planning can be included in this context.
Asset protection presupposes that estate is protected against any exigency that might arise. With this purpose in mind, Barry ought to make an asset protection plan which includes identification of potential risks that estate may be exposed to. The second most important step is to think over and work out preventative tools. The latter should be included in more global strategic planning. Strategies on asset planning usually involve liability insurance and ownership issues. In Barry’s case he certainly ought to have his estate insured and all the legal issues clarified on the behalf of his children. (Baldwin, 2002)
Wealth accumulation presupposes that the person carefully plans every estate purchase and as the result a certain amount of wealth is accumulated. Wealth accumulation usually means that the owner serves in the role of an investor and as such he conducts his personal net worth analysis and analysis of the estate market in order to make a profitable investment. Investment ought to pursue long-term goals as there is evidence that the best profit is made when the person can evaluate its margin for the years to come. On the other hand, it is recommended that asset allocation should be diversified and as such meet the investor’s goals. In Barry’s case he should while buying new property not forget about, for example, his children education.
The final integral part of estate planning involves wealth distribution. Wealth distribution means that wealth is handed down to the closest relatives of the person if he/she dies or any legal issue arises. Sometimes spouses are apt to conclude pre-nuptial agreements in order to avoid wealth losses by one of the party in case of divorce. However, Barry should most probably do or consider doing the following two steps: he should make a will on behalf of each of his children, he should foresee their legal involvement in running and managing estate when they reach the full age. In a word, he should anticipate providing the financial security for his children and treat them fairly and equally.
The second question of the present paper is about Rami’s situation. It can briefly summed up as follows: Rami unfortunately met in an accident with his wife. The tragedy of it all was that she died. Rami dis stay alive and was left with a son of 12 years of age. Besides, he has a retired mother of eighty. Estate planning has become Rami’s priority. In the paper steps that he might take will be discussed.
Firstly, estate planning does depend on the country where the person resides. Not only have the prices of estate varied from a country to country but there is different law that regulates estate acquisition, transfer and distribution. Besides, the tradition plays a certain role. For example, since in Muslim countries divorces are less common than that in the West there is a usual disinclination to make them. Another reason for this is that the law tends to cater predominantly for men’s needs and it is actually women who might be more interested in prenuptial agreements.
In case of Rami who resides in Malaysia the first thing he should do is to get acquainted with some legal provisions of his country and decide how he can protect the estate he already has. It is most likely that if anything happens, according to Malaysian law, his mother will have a share in his property while his son might be taken in custody by her until he reaches legal age. However, considering the age of his mother, Rami might get another potential custodian for his son or become himself the one so that to empower his son in relation to the inheritance of property. (Kunreuther, 1996)
Secondly, Rami should consider whether he has any share in his wife’s property as he most certainly does and this share could be automatically given over to Rami’s son when he reaches full age. Acquisition opportunities of property should also be considered by Rami but this very much depends on the financial situation he finds himself into. Anyway, it might be recommended for Rami not to extend over the expenses on the property acquisition as he will need to provide for his son’s education in the nearest future and this will entail some money to be spent.
It is also a possibility that as a single parent Rami is entitled to some privileges and financial benefits and incentives. These opportunities should be explored and embraced. In particular as a Malaysian Rami might expect some tax cuts but the particular amount of the reduction can be evaluated only after taking into account the financial position of Rami’s family. In any case Rami ought to be responsible parent and in such a capacity he ought to work out estate planning solution for his child and for his mother since their lives largely depend on Rami’s decisions taken.
Bibliography
Veasey, Westray B., Craig G. Dalton Jr., Poyner Spruill (May 24, 2013). Why You Need an Estate Plan Post 2013 Tax Act. The National Law Review.
Baldwin, B. G. (2002). The new life insurance investment advisor, second edition. New York: McGraw Hill.
Kunreuther H. (1996). Mitigating Disaster Losses Through Insurance. Journal of Risk and Uncertainty: 35-62
