The Four "P's" of Modern Estate Planning - Up Third, Protection
Thursday January 15, 2009
On Monday I focused on the second "p" of modern estate planning, problem solving. Tied right in with problem solving is the third "p" - protection - which has evolved from the overwhelming need to protect our families from their youth, bad habits, negative influences, divorce, lawsuits, and creditors. These needs have grown from the traditional estate plannning goals - to protect our families from probate and unnecessary taxes. While these traditional goals are still prevalent today, I help clients plan for the new goals just as frequently as the old ones.
Today estate planners aren't inclined to let their clients' families fend for themselves after their loved ones become mentally incapacitated or die. Checks and balances are built in every step of the way, from helping clients make smart and informed decisions about who will be in charge; to helping clients set up lifetime trusts to protect beneficiaries from themselves, others, and unnecessary taxes; to helping clients create a family legacy that will provide support, advice, and incentives for years into the future; to helping clients implement asset protection for themselves through long term financial planning and sophisticated estate planning that will preserve their wealth for generations to come.
Protection is an integrated approach to estate planning that really represents the evolution from traditional estate planning to modern estate protection. Next up, peace of mind.
Further Reading
Estate Tax Repeal Update: The End of Repeal
Tuesday January 13, 2009
Yesterday in an article for The Wall Street Journal, Jonathan Weisman reported that once President-elect Obama takes office next week, Democrats in Congress will act quickly to end the repeal of the federal estate tax that's scheduled to take place on January 1, 2010.
In his article, Weisman summarizes the interesting history of the forces behind President Bush's 2001 legislation that led to the gradual increase of the estate tax exemption from $1,000,000 to the current $3,500,000 exemption. The article also reports that if the current exemption is locked in for the next 10 years, then only about 2% of estates will be subject to the estate tax and the U.S. Treasury will lose around $324 billion more than if the estate tax exemption is allowed to revert back to the pre-2001 amount of $1,000,000 - what it's currently scheduled to do in 2011.
What does this mean for you and your family? Estate tax repeal is officially dead.
Further Reading
Other Posts on Estate Tax Repeal
The Four "P's" of Modern Estate Planning - Up Second, Problem Solving
Monday January 12, 2009
As I wrote on Friday, modern estate planning focuses on four things - planning (of course), problem solving, protection, and peace of mind. Planning is the foundation of all estate plans and also involves four things - planning for what will happen if you become mentally incapacitated, planning for what will happen to your "stuff," planning for who gets the rest and when and how they'll get it, and planning for who will be in charge of carrying out your wishes. And all four of these plans require a great deal of problem solving by your estate planning attorney.
Fortunately when I was in college I took several courses in psychology because today's estate planning attorney is more of a counselor and trusted advisor than ever before. Why? Because today our clients' families and financial situations are complex and require a great deal of problem solving to put together an estate plan that will work in each different and unique situation. In fact, when I speak with other estate planning attorneys, we joke about the "good old days" when our clients were married for over 40 years, had two well-adjusted children and four well-adjusted grandchildren, and all they wanted to do was avoid probate and save on estate taxes.
Today estate planners must deal with blended families; same sex and unmarried couples in committed and long term relationships; couples with a significant difference between their ages and/or wealth; beneficiaries who are irresponsible, greedy, drug addicts, bankrupt, disabled, divorced or on the verge of divorce, trying to "find" themselves, bad with money, bad to their children, and/or bad to themselves; and ever changing and complex estate and gift tax laws. Balancing what the client wants and needs and what the client's beneficiaries want and need with what the law allows takes every bit of the estate planner's engery and problem solving skills and in many cases a team of other professional advisors to put it all together. Through years of experience estate planners are equipped to make recommendations to our clients that will actually work because we've been there and seen what really happens when someone becomes mentally incapacitated or dies. This is how we solve problems and become our clients trusted advisors. The traditional approach to estate planning no longer works today because estate planning is about so much more than avoiding probate and reducing estate taxes. Up next, protection.
Further Reading
The Four "P's" of Modern Estate Planning - Up First, Planning
Friday January 9, 2009
As I wrote on Wednesday, traditional estate planning focuses on two concerns - avoiding probate and minimizing estate taxes (and a third concern if minor children are involved - choosing a guardian for the children). But as times have changed, so has the focus of estate planning. Today, modern estate planning involves four things - planning (of course), problem solving, protection, and peace of mind.
The planning part is the basis for the other three things. In other words, without addressing your basic estate planning needs, there's no need for problem solving or protection, and therefore no peace of mind. Planning also involves four things - planning for what will happen if you become mentally incapacitated, planning for what will happen to your "stuff," planning for who gets the rest and when and how they'll get it, and planning for who will be in charge of carrying out your wishes. All four plans must be combined to make a solid estate plan. Without just one of these plans, the other three plans will fail. Up next, problem solving.
Further Reading
