Wealth Management Seminar II - Essay Example

One of the lessons learnt from this unit is on the tools of e planning, and one ofthem is the will. From this lesson, I learnt that it is important for an individual to discuss the provisions of a will, and this is for purposes of preventing any problems that may arise because of the execution of the will, and after the writer of the will has died (Mentz, 2009). This is an important recommendation or advice, because on most occasions, dissatisfied family members normally contest the provisions of a will.

I learnt that the will has a variety of purposes and amongst these purposes includes establishing testamentary trusts, making specific bequests, appointing an executor, and distribution of personal effects (Mentz, 2009). This was a new lesson to me, and this mainly because I had a narrow idea on the purpose of the will. In my opinion, the will was only created for purposes of distributing the wealth of an individual. However, my perception changed after this lesson. Insurance is also an important tool of estate planning, and this is because it plays two important functions, these are, the provision of liquid funds that can be used for burial purposes, and the benefits of insurance policies are not always taxable (Mentz, 2009).

This was a new knowledge to me, because in my own opinion, I was only aware of two tools of estate planning that is the will, and establishment of trusts. However, this lesson introduced new tools, such as the power of attorney, gifting and insurance policies. Another area that was of importance to me, was on the techniques that can be used for purposes of estate planning. These techniques include designate beneficiaries, income and capital shifting, and tax deferral (Mentz, 2009). Under this lesson, of particular interest to me was income and capital shifting.

I learnt that splitting of income is a popular technique of estate planning because it has the capability of lowering income tax, maximizing credits or deductions, and it is easier for an individual to proof the various sources of money that can be used for purposes of calculating the income tax of an individual (Mentz, 2009). This was new knowledge to me, and I was happy to learn it. Risk management is also an important concept in the planning process. One of the elements of risk management, and that is applicable to estate planning is insurance.

One of the major costs of an insurance policy is the premiums that an individual would pay, for purposes of accessing the services of an insurer (Mentz, 2009). This lesson confirmed my knowledge and belief in regard to the factors that are responsible for determining the costs of premium that an individual should pay. These factors include, the probability of the event under consideration happening, the costs that the insurance company would compensate the insurer, and the number of people who are involved in the sharing of risks (Mentz, 2009).

Under risk management, I came to realize that there are five important steps that an individual has to follow, for purposes of reducing the risks under consideration. These steps are, identification of any potential risks, evaluating the identified risks, controlling the risks, financing of the risks, and monitoring the profile of the risk. Through these methods, I came to realize that an individual would manage to mitigate on the various risks that he or she may face (Mentz, 2009).

Finally in this lesson, I came to learn that life insurance is the most preferable type of insurance for estate planning tools. This is because it insures the life of an individual, and upon death, the family of the bereaved are assured of money that can be used for purposes of conducting the funeral, and other activities in support of the bereaved. In conclusion, the lesson learnt from this article are very beneficial to me, and some are new, while some have just confirmed my ideas concerning the issue under consideration.

An example is the will, and the new lesson learnt is that the will can be used for purposes of appointing an executor, while the confirmed lesson is that the will can be used for purposes of distributing the properties of a dead person. However, this section focuses too much on risk management, and the role of insurance in mitigating on these risks. References:Mentz, G. (2009). Chartered Wealth Manager. American Academy of Financial Management.