There are a number of common misconceptions that, in your role of catalyst, you must put to rest to help clients recognize the benefits and advantages to them of estate planning services. These misconceptions include:
- Estate planning is for the very old and the very rich.
Estates of all sizes are subject to substantial shrinkage from estate settlement costs. The best time to start estate planning is when an individual is young (and insurable at low rates). Waiting until late in the game makes certain options, such as life insurance, unavailable or considerably more difficult or expensive to obtain.
- All I need is a will.
While it is important to have a valid will, large estates (and those with special bequest needs and wishes) require more. While a simple will may transfer assets according to the estate owner's wishes, the end result may be higher taxes than if another approach were taken. In other words, a simple will can have unintended (and costly) consequences. Your role is to help clients understand exactly what will happen at their deaths under their current estate plans, and how the results might be different under a different plan.
- Use of the marital deduction eliminates estate settlement costs.
The marital deduction simplifies the estate tax settlement process, but it does not necessarily reduce taxes ultimately paid. The marital deduction postpones payment of estate taxes until the surviving spouse's death, when the tax bill may be even higher, if the estate continues to grow. In addition, estate liquidity is still needed to pay the other settlement costs at both spouses' deaths.
