Estate Planning is a Matter of Timing – And Counseling

In March, Dan Duncan became the first billionaire to die in this year of an federal estate tax repeal – that is to say, no federal estate tax at all.  Assuming no retroactive changes, Duncan may be the first billionaire to pass his wealth onto his children and grand-children free of estate tax.

This article by the New York Times focuses most of its analysis on the impact of the estate tax repeal and the timing of this death.  In my educational seminars, I spend a few minutes telling folks tongue-in-cheek that Choosing The Wrong Year To Die is a “common estate planning mistake.”  My point, besides making a joke, is that the law is ever-changing.  The estate plan that is right on target today may be obsolete or rendered ineffective by changes in the law in the future.  That’s why it is so essential to engage a lawyer who has a consistent and deliberate formal updating process as an integral part of their practice.  Some estate planning attorney call these “client maintenance” or “client care” programs – whatever the name, make sure your attorney has one.  

However, timing is just one element of an effective estate plan.  The other part is finding a professional who understands the law and the rules who can work them to your benefit.  There’s a saying that there are two tax systems in this country.  No, not one for the rich and one for the poor – rather, it’s one for the informed, and another for the uninformed.  Without the proper planning, couples with an estate of $2MM could pay $550,000 in federal estate tax if they both passed away next year (2011).  With proper planning, the total federal estate tax due by that same couple drops to zero ($0).

As with income taxes, there are some people who (legally) pay much less than folks who make the same amount per year.  The difference is that the couple who paid less income tax engaged the services of a profession who understood the rules and how the system works, identifying opportunities and benefits that are not self-evident – and which would never occur to the lay person.

The value of a professional is not in the documents he creates. It’s in the knowledge and experience that enable him to tell you what you should do.

No matter what you year you may die.


Posted by Victor Medina, Medina Law Group, LLC