Estate of Confusion
All of us have discussed the difficulty in the estate
planning world based on the lack of clarity regarding the future of the estate
tax. Check out this article for some of
the darker aspects of this problem. Go
ahead and read it now. I'll wait.
Too Rich To Live?
Of course, there is a more subtle message in this story that
I missed the first time through: Neither
the author nor the "outspoken critic" are correct in their thinking that there
is "no estate tax" in 2010. All of us
know there is still a transfer tax based on capital gains. If this is the type of analysis our clients
are reading, they are sadly misinformed about the reality of this year. Speaking of being sadly misinformed, one of my colleagues
was kind enough to give me a reprint of a Worth Magazine article about the
ultra-affluent (Net worth north of $150 mil) and their thoughts on life
insurance. There were a number of
surprising conclusions: -
Nearly 9 out of 10 respondents own life insurance
-
20% admit they do not understand life insurance, and the
other survey answers indicate that percentage is higher in reality
-
Protecting purchasing power for future generations is almost
as large a concern as estate taxes
-
The stated goals of the client and the policy types they own
appear to be in conflict
-
Life insurance is beginning to be viewed as an alternative
investment strategy based on predictability, tax advantage and noncorrelation
to other alternatives
-
Life insurance is treated with less diligence that other
assets
All of this boils down to one thing - these ultra-affluent
insurance owners are just like every other insurance owner. In addition, these individuals typically have
small armies of advisers. I'm not sure
if these results might be a bit off as a result of the client's reliance on these
advisers? I would also be a bit
concerned about the goals vs. policy type conflict if the advisers are really
driving the boat. In any event, if these
sophisticated clients with top notch professionals on their team are off
target, most of the public is. Time for
us to get down to work and clear up the confusion. Have a great weekend. |
