November 16th, 2011

Estate Tax and Asset Transfer Planning

By Dave

by Ron Nakamoto

When it comes to planning for estate taxes and passing along assets to children and grandchildren, most people start thinking about wills and trusts. But very few take a critical first step: thinking about how they think.

People like to think that they’re being sensible and rational when they hire attorneys, accountants, insurance agents, and financial planners and make decisions about how to structure their wills, transfer their assets into trusts, give away assets to relatives and charities, and set up life insurance to deal with estate taxes. But here’s the surprising truth; they aren’t.

It’s not that advisers and their clients aren’t well-meaning and sincere in their efforts. After all, isn’t this estate planning effort really about minimizing taxes and maximizing the amount of money that’s left? Before you answer this question, consider these:

• Would you willingly engage in a traditional estate planning process, knowing that there’s a greater than 90% chance that by the time your financial assets reach your great, great grandchildren, there’d be virtually nothing left?

• Do you truly believe that the only meaningful thing that you can contribute to the future prosperity of your heirs, your friends, and your community is your money?

• Would you willingly give up your choices of what to do with your money and the control of your money if you knew that you didn’t have to?

If you answered “no” to any of these questions, it would be useful to reconsider what estate tax and asset transfer planning is all about.


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