A decision model for the estate management problem

Abstract

Estate management planning requires the development of a comprehensive plan (a) to insure successful economic management of the estate property during and after the lifetime of the owner, and (b) to produce the desired legal consequences in the disposition of the property after death. For adequate analysis, both changes in the ownership and in the size of the estate over time and the uncertainty of the death of the testators must be considered. This paper develops a dynamic decision model that can be used to evaluate how well alternative legal and financial tools satis fy specified estate-management goals. The conceptual model is stated in mathematical form and is trans formed into a stochastic, multistage computer simula tion model. The paper includes an example illustra ting the use of simulation in a practical case.