Careful estate planning is important for so many reasons. The fact is that leaving a legacy is about much more than just figuring out a way to avoid taxes. First, you need to start by avoiding some common pitfalls.
After more than two decades in this practice, I have yet to work with a client who had all his beneficiary designations completely correct. Unfortunately, the consequences of this avoidable mistake usually surface when it's too late. Even though folks insist prior to having to make a claim for benefits that they were sure everything was in order, they find out the hard way that they should have double-checked and confirmed everything in writing.
The reality of what happens when you're gone is this: your assets will go to Congress (via the federal and state treasury), your heirs or friends.
Under your existing plan, how much is going to Congress, and why? Why wouldn't we leave as much as possible to family? By voluntarily including one more key recipient — charity — in your plan, you can virtually disinherit Congress, thereby maximizing what will go to your heirs.
Estate planning isn't just about dying. It's about whether you're going to endow somebody else's values by involuntarily sending your assets through the tax system, or endowing your own values through the careful planning that will directly fund the people, causes and institutions you deeply care about.
Another planning aspect to consider carefully is this: fair, equitable and equal are three entirely different terms. Sometimes, leaving substantial wealth to family can be as detrimental as not leaving it. So, almost as important as the question of "How much?" is the question of "How?"
Being "equal" in how you give it might help one person and might destroy another. Here's a practical reality: It's very different from family to family, and it's very different from child to child.
It makes sense to know in advance with absolute confidence the answers to the following questions about what happens to your wealth once you're gone:
· Who? (precisely and confirmed in writing)
· How much? (to Congress, family, charity)
Doing so will help give you the clarity to incorporate giving strategies that fund the communities, causes, institutions and missions you really care about.
Michael L. Schwartz, RFC, CFS, CSA is a wealth manager and investment advisory representative of First Allied Securities, Inc. He can be reached at: [email protected]