We are only into the second week of this New Year and those respected journalists of the internet world have already dismissed the need for attorneys, accountants and trust officers. “With an exemption of $5,000,000, there is no need for estate planning”, followed by, “just leave everything in joint tenant”, but my favorite was “a trust doesn’t do you any good while your living”.
Don’t get me wrong, I love the internet, there is so much worthless information available at your fingertips, and just like that insurance add says “it has to be true if its on the internet”.
I assure you that the need to discard professional advisors just isn’t true. But let’s discuss what is true:
1) IT IS TRUE: Fewer people will do estate planning because a high number, like $5,250,000 gives a sense of comfort “that tax doesn’t apply to me”;
2) IT IS TRUE: Those who have no plan will all have something in common; they will not live forever (see #1);
3) IT IS TRUE: Those who have no plan will likely leave their heirs the experience of a probate proceeding;
4) IT IS TRUE: Some will use the joint tenant approach to estate planning, probably leaving an imbalance among their heirs, both personally and monetarily;
5) IT IS TRUE: A few will attempt to plan by preparing one of those “Wills, Trusts and Powers of Attorney” from the “as seen on TV aisle”, they will then appoint someone they should not have trusted with control of everything they own.
6) IT IS TRUE: There are many amounts under $5,250,000 that are still considered to be a lot of money! And honestly, wouldn’t you really like to have the problem of having to pay tax on any amount over $5 million?
7) IT IS TRUE: Quite a few of those who have no plan will live longer than they anticipated and they can look forward to their lifestyle being determined by a Court in their Guardianship proceeding;
8) IT IS TRUE: Some of those people without a plan will have children that might not be prepared to receive, manage or protect their inheritance;
9) IT IS TRUE: Others will have family members with special needs who receive government benefits; improper planning can lead to a loss of benefits and requalifying can be time consuming and expensive.
10) IT IS TRUE: In our market, we have people with no family in the area, if there is no plan in place, who will take care of them?
Winston Churchill said, “He who fails to plan is planning to fail”.
So maybe the tax side of planning is not an issue. A trust document continues to be a great tool that makes sure you control your assets while you are able, and in the event you are not.
And for those of you who missed President Obama’s comment following the tax side of the “fiscal cliff” vote; “nothing is off the table”. The deficit still exists, and since we have had the 11 Estate Tax Exemption changes since 1997, what is one more!