The New Estate Planning: It's All About the Family!

What is Estate Planning Really About?

Are you like 70% of the folks out there who don't like to think about or hear about wills, trusts and estate planning? Well, if you are, don't fret. Many people believe that estate planning is only for the rich. Not only is that false, wills and trusts actually do more to protect people who don't have millions of dollars and property.

Why estate planning is not for the rich folk!

As the preceding article from one of the top companies in the world reveals, estate planning is about your family. Creating certainty, protecting your spouse and loved ones, protecting children, it's ALL about your family.

So how did the myth start that estate planning was only for the rich? It dates back to when the federal exemption against the federal estate tax (some call it the "death tax") was very low. Do you know the history of this exemption? The exemption is used by the government to define when YOU are wealthy (rich) enough to have to pay estate tax when you die.

The History of the Federal Estate Tax:

Thanks to the good people at Cook & Cook, here is the history and it's shocking.

History of the federal estate tax exemption and rates:

Let's start with the year 1978, the year I started practicing law. The federal estate tax exemption (the definition of wealthy) was a mere $134,000! If your estate was greater than $134,000, you paid federal estate tax and if you look at the chart, the marginal rate of that tax was a horrifying 70%! As you can see from the chart, the exemption has increased over time, not even coming to close to keeping up with the economy or inflation.

So here is where the myth about estate planning started--we were all concerned as estate planners with reducing or avoiding this tax, the highest tax ever imposed on citizens of our country. When the exemption was low, the focus was estate tax planning. Most people were so incensed about the estate tax that they didn't pay proper attention to the real reason for estate planning--protecting the family.

The Federal Estate Tax in 2015:

So where are we today? In 2015, the exemption against the federal estate tax is $5,430,000 and is scheduled to increase in 2016 to approximately $5,515,000! Now that's more like what someone would expect as a real definition of wealth.

With the exemption against the estate tax at this level, the old, historical focus on estate tax planning is less relevant for most families. As you might think, far fewer families have estates over $5,430,000 than that old exemption of only $134,000. Because the exemptions are at historically high levels, the focus for most families is on protecting the family.

Most common is the desire to protect the spouse, then children and then other family members. I have always believed that protecting family should always be the driving reason for a client's estate planning and this focus should be reflected in documents such as wills, trusts and powers of attorney.

Good estate planners never let the tax tail wag the family dog! That's a good rule of thumb to remember when you think about your estate plan. Just because taxes are not a concern doesn't mean that we don't care about our families. We do and here are three short videos that illustrate just how important this is.

Estate planning for young families:

Estate planning for children over 18:

Estate planning for blended families:

So when someone says to you, "I don't have enough money to do a will or estate plan" share this article with them so they can have the full story.

Let know your thoughts on this and please join our conversation by commenting or sending me an email. Thank you for your interest.

Bernie Greenberg

Whose Money is it Anyway? Why You Should Care About the Shutdown

Whose money is it anyway and why does it matter? How the government shut down is all about your money.

In honor of election day, today, I want to ask you a question that we should always ask ourselves when thinking about who we vote for and how those elected officials are doing. That question is, WHOSE MONEY IS IT ANYWAY? How you think about this question is fundamental to your world view.

Several years ago I wrote an article that appeared in several newspapers and other publications. You might even remember it because it was discussed on various media. The article was about another dust-up in Washington when another issue about taxes and federal spending captured our attention for several moments.

In that article, and again here, we discuss the arrogance of politicians when it comes to how easily they forget whose money they are fighting over. This is a non-partisan article, just like the earlier one. Both sides are guilty of this and there doesn't seem to be any ideological side that is worse than the other. Both sides, and seemingly every politician forgets when they are elected two important things:

1. Who elected them and

2. Whose money are they dealing with while they are in office.

I'm going to leave the first issue for another day but you may want to give it some thought anyway.. But the second, well, that's what we are discussing here. So let me pose the question to you, whose money are politicians spending? Some might debate this, and they would be wrong. You see, the only money that politicians ever deal with IS YOUR MONEY!

This is so fundamental to  how the government works that it is surprising that so many people forget. What is even more serious, perhaps even insidious, is that politicians act as if they never were aware of this simple and elementary civics lesson. The money they deal with, the money that they spend, the money that even pays their salaries and perks is your money.

Let's take the latest fracas in Washington, the current showdown over the shutdown at the politicians' corral. While many have forgotten this as they pay attention to only the latest news cycle, here we are on election day and very few are even mentioning the shut down. The issues are numerous and perhaps even complex. But, the argument, the actual bottom line argument is who gets to control and dictate the use of your money. The politicians are playing chicken with your money and pretending that the whole thing is about ideology. It's not and never has been about ideology, it's about power.

So who do you want to be in control of your money? Politicians? Big Banks? Corporate executives? Yourself? Let me know your thoughts and who you think your money belongs to. My answer is that your money belongs to you. Whether you give control over it to someone else is up to you.

I look forward to your comments.

Bernie Greenberg

Why People Delay Estate Planning--Your Thoughts

Recently, in discussions with several professional groups, we have addressed the increase in people putting off their planning. In our discussions several reasons for this negative development were raised. Things like:

1. Why bother?
2. My estate isn't big enough.
3. The estate tax exemption now protects me.

There are other reasons, but these seem prevalent. As you can imagine, reasons such as these have no validity, but do prevent people from protecting their families. In my town of Castle Rock, CO, I am the only full-time estate planning attorney. Helping folks work through these issues is very important and I would like to hear what you think.

What are your thoughts about these issues? Do you think these reasons are valid? What did you focus on when you decided to proceed with your estate plan? How do you suggest to people the importance and need for estate planning?

Studies show that people will spend more time and money every year on a vacation then they will ever spend on their own estate planning. Given how important it is to protect family.

I look forward to your thoughts and comments. Thank you.

Bernie Greenberg

Specialization: Don’t Leave Home Without It! 4 Reasons Why You Should Care About Specialization

4 Reasons Why Specialization Matters

Recently I asked my readers how they feel about specialists, those experts who limit their work to a limited area of specialization. I thank Denver attorney, E.C. Lewis for sharing her thoughts about specialization.

The concept of “specialization” is not limited to professionals like lawyers and doctors. Many fields have specialists as I discovered concerning auto mechanics. Before I list the four reasons that dealing with a specialist is the smartest move you will ever make, let’s explore specialization further.

A specialist is someone who limits their work to a certain and defined area. Certain professional specialties even have certifications required before the specialization can be claimed. Here is a good working definition:

Someone who has limited their work to a defined area, either has a certification or recognized expertise in that area, and does that work full-time with at least seven consecutive years in the specific area.

What are your thoughts about this definition? If we accept this definition, then when isn't someone a specialist? Consider these examples of someone who is not a specialist:

1. Advertising on TV, radio, or social media.
2. Simply claiming to be one.
3. Accepting any work that comes their way without limiting their work to the one certain area.

There are four reasons to work with a specialist in whatever area you are considering. They are:

1. Specialists are experts.
My favorite example of this is in the medical field. If I break my leg, I am not going to the heart doctor. I know this seems silly, but it illustrates the point of expertise. Don’t you want to deal with someone who is an expert in your area of need?

2. Specialists are more competent.
Competence is a function of two factors: first is knowledge, the knowing of the expert's area; and second, experience. Nothing beats the value of having done something many times, this is how we learn, how to avoid mistakes and problems and how to improve. Consider this: the military; fire fighters or athletes are constantly training, constantly repeating, over and over what it is they do. I have heard this referred to as developing unconscious competence. From repetition comes experience and from experience comes competence. Specialists are simply more competent.

3. Specialists protect you.
Only a competent expert can anticipate what might go wrong in a project. Being able to anticipate problems allows the specialist to protect you from these risks. Here’s an example from my life: I tried to install a carpet strip at the edge of the kitchen. I am not a specialist in this type of work. Not knowing the material of the floor almost cost me big as the nail I was attempting to use exploded and hit my arm like a bullet. When I had a carpet specialist look at the project, they had an answer that was safe and effective. That is a perfect example of how a specialist protects their customers. They know the problems and now to solve them before someone gets hurt.

4. Specialists save you money.
Since a specialist knows what to do, how to avoid and solve problems, the specialist can get the project done timely, without loads of “do-overs” and since problems are avoided, usually at the lowest cost. Here’s another example: a client of mine needed to replace the timing chain on his older vehicle. He got two estimates, one from a specialist and one from his buddy. The buddy’s estimate was 40% lower than the specialist. Can you guess the result? That’s right, he went with the lower estimate and by the time the buddy's work was repaired properly he had spent over twice the estimate from the specialist. I also see this in my estate planning practice. Clients will try and create their own estate planning documents or work with non-specialists and end up spending huge fees to fix the problems created.

My point with this article is that there are actual and measurable benefits to dealing with specialists. This is true in any field, car repairs, medical services, legal services and in my specialty estate planning. Since there are so many people offering services in areas that they don’t specialize in, being aware of this can help you protect yourself and your family.

What are your thoughts about specialists? Please join our conversation and comment here or send me an email with your comments. Thank you.

Bernie Greenberg