Planit:Faraid and Estate Distributions Analysis Case Study
When it comes to Estate Planning, one of the key tools for clients to identify their wishes is their Last Will and Testament. On the Will Information screen you can identify any distributions the client and spouse wish to make to their children, charities, or other beneficiaries, in dollar amounts, percentages, or in terms of their residual estate. This will allow you to identify the total estate distribution, and the total estate for the various beneficiaries.
Example Problem One:
Karim and Tasmin want to divide their estates according to the faraid distribution. You have asked Karim and Tasmin to identify all of their surviving relatives: Karim has a full brother, a daughter, and of course his wife. Tasmin would die leaving her husband, daughter and a full sister. They have no other surviving relatives. You have constructed a faraid table showing the distribution:
- What is the total distribution to Tasmin if Karim dies first?
- What is the total distribution to their daughter if Tasmin dies first?
Solution using the Will Information Screen:
Set the process flow to Integrated Planning, and skip ahead to the Will Information screen.
This case study will not review all components of the Will Information screen, such as the burial and probate costs in the first section. For more information on these planning functions, visit the Planit:Estate Analysis of Expenses and Distributions Case Study.
We will now proceed to enter the data for the Partial Distribution and Residual Distribution sections.
1. For Karim’s first partial distribution, enter 12.5% in the Percent field, leaving the Dollar Amount blank. Change the Beneficiary setting to Spouse.
2. For Karim’s second partial distribution, 50% in the Percent field, leaving the Dollar Amount blank. Change the Beneficiary to Child.
3. The Residual Distribution setting for Karim should be set to Other since there is not a specific setting for brother.
Note: You could also choose to identify the brother as one of the Partial Beneficiaries receiving 37.5% of the estate. In which case, you would then show the child or spouse as the residual beneficiary. It does not matter which relative is the residual beneficiary, since the Will Analysis will always give out 100% of the estate after costs, so the fariad distributions will be allocated properly.
4. For Tasmin’s first distribution, change the first Percent field to 25%. Change the drop-down menu for the Beneficiary to Spouse.
5. For Tasmins second partial distribution, enter 50% the Percent field, leaving the Dollar Amount field blank. Change the Beneficiary to Child.
6. The Residual Distribution setting for Tasnim should be set to Other since there is not a specific setting for sister.
7. Click Save
To View the Estate Analysis Report:
Click the Preview button at the bottom of the screen, OR
- In the Your Working Documents screen, click on Preparing Reports – Risk Management.
- Click on the Radio button beside Estate Analysis.
- Click on the Generate Document link. It will usually take one minute to generate. You can either wait for it to appear in the Your Processed Documents window, or hit the Refresh button periodically until the completed document is ready for you to download.
- Finally, when the document has completed calculating and is ready to view, click the Download button.
To identify the total distribution to Tasnim if Karim dies first, scroll down to the last line called Total Distribution in the Karim dies first section. Follow the line until it meets the column titled Tasnim and record the number.
To identify the total distribution to their daughter if Tasmin dies first, scroll down to the last line called Total Distribution in the Tasmin dies first AND Karim dies second section. Follow the line until it meets the column titled Children. Add the two values and record the sum.
Go to the exercise to test your knowledge on faraid distributions