Question

What is "Post estate planning"

Answer 1

In order to understand post estate planning, we must look at what is estate planning .

Estate planning basically encompasses arranging and planning for the succession and financfin affairs related to the estate. An estate plan incorporates a person's wishes regarding estate management , its preservation and estate legacy during and post life.The primary goal of estate planning is to ensure that the transfer of estate owner's property takes place to the intended beneficiaries without being engaging into the court proceedings for the succession matters.

Now let us look at what post estate planning actually is.

Post estate planning, also referred to as the post - mortem estate planning means ' after the death ' planning of the estate issues which can turn out to be really complicated. Death of a person in a family is a critical juncture in the estate planning process for the survivisurviving family. The goal of post planning is to reduce the tax liability of the estate and its beneficiaries. Due to the changes in the federal law, a new law called probability helps the surviving spouse to make use of the tax exemption gain that was prevailing for the dead spouse.So a federal tax return must be filed even of there are no tax liability existing. By avoiding such a step the surviving member can invite huge tax savings being squandered. Therefore, this step is critically important.

Next important aspect is the use of qualified disclaimer. A disclaimer is renunciation of the right to receive some or all of the assets passing on to a person as a result of the death of the owner. Therefore a qualified disclaimer must be documented in order to make the flow of assets more smooth and flexible. Another most common planning alternatives to alleviate double taxation as a loss carry-back under Section 164(6) of the Income Tax Act. Under this option, the private company is wound up during the estate’s first assessment year thereby creating a capital loss in the hands of the estate. The estate thus files a special election under Section 164(6) to carry back this capital loss and offset the capital gain in the deceased’s terminal tax return. As a result, the estate will only be taxed once—on the deemed dividend.

Thus these are the basic benefits and precautions that must be kept in mind to take up the post planning .