3433-vol. 6 issue 2-3.pmd - iarfc

10
Journal of Personal Finance
EDITOR’S NOTES
The recent news, on March 13, 2008, that Congress may actually
make progress later this year to permanently reform the estate tax exemption
likely drew a collective sigh of relief from many financial advisors, attorneys
and clients. Many would agree that the projected exemption of $3.5 million
per individual and $7 million for a married couple with a 45 percent top rate is a
very workable compromise. Better yet, it likely excludes many advisors and
clients from concern with federal estate tax issues. However, should that
proposal actually become law, it does not change the significance of estate
planning issues within the scope of comprehensive financial planning, or
more importantly within the scope of financial life planning. In fact, just the
opposite is true, because as news of higher federal tax exemptions spread,
even more clients will be inclined to say, “I don’t need to do any planning.”
Although planning for federal estate taxes may no longer be an issue, other
basic estate planning objectives, as listed below, remain significant. These
issues include insuring that
• Property is distributed per the wishes of the decedent;
• Control issues, such as property ownership, titling and powers
of attorney, are consistent with the desires of the decedent;
• Taxes, and legal, accounting and probate fees are kept to a
minimum to preserve the estate;
• Decision authority for health care or incapacitation is clearly
identified; and
• Privacy issues are fully protected.
Given the perceived complexity and emotion associated with these
issues, it is no wonder that advisors often have little success in motivating
clients to act on estate planning issues. Too often no action occurs, or it may
be a year or longer from the discussion of estate planning issues until the
client finally engages the services of an attorney to draft documents. Yet it is
this very aspect of financial planning where some of the worst client “war
stories” surface and clearly illustrate that implementing even simple planning
strategies could have averted problems that made a difficult life situation even
more painful.
Ethical wills may be the needed bridge between failure to take any
action to a personal acceptance of immortality and the need for planning to
protect the interests of self and others. Therefore, the promotion of ethical
wills can become a value-added component of the estate planning discussion
and education that advisors routinely provide. The emotional appeal and
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