Estate planning - who needs it?

This week's ad of Gitlin, Busche & Stetler in the Northwest Herald caught my attention, because it addressed estate planning. You might want to read and clip the advertisement, which is presented as a Q&A by Michael Stetler, one of the partners.

When I lived in Denver in the late 1970s, I was a Chartered Life Underwriter (C.L.U.) with Northwestern Mutual Life and served a year as president of the Rocky Mountain Estate Planning Council. The Council was a group of CLUs, CPAs, trust officers and attorneys who specialized in estate planning.

I recalled the definition of estate planning that was used by one of the popular attorneys there. He kept it simple: Estate planning is getting what you have to whom you wish to have it, at the time you want them to get it, and in the manner in which you want them to receive it; and then, if you can save some taxes, you do that, too.

The current $5,000,000 threshold for the Federal Estate Tax has, for many, eliminated planning for the purpose of saving estate taxes. But there are other good reasons to plan.

You can thank Gov. Quinn for reinstating the Illinois Estate Tax on January 13, 2011. But perhaps you do want to thank him, because there is a $2,000,000 exemption. (Source: McGuireWoods LLP) According to a different website, Illinois no longer has an inheritance tax.

Stetler offers some very good advice with "To make sure your wishes are carried out both with your respect to your property and your health care you should have an estate plan."

If you knew one of your children was a spendthrift ("someone who spends money prodigiously and who is extravagant and recklessly wasteful", per Wikipedia), would you want that child to be able to get his or her hands on a pile of money? Would you put that person in charge of clearing up your estate?

Look at it this way: would you put the fox in charge of the hen house?

It takes a strong attorney to make a firm recommendation to the client who is writing a simple will that leaves everything outright. Yet it's the client (the customer) who makes the final decision.

I saw, and I still see, far too many mistakes in estate planning, whether through the use of simple Wills, Wills and trusts, or drafted (but unsigned) wills. Take this one, for example. A Will created a testamentary trust with a bank trustee. Good planning, when there was a sizable estate; right? The problem was that the bank had closed its Trust Department 15 years before the person died! Why didn't the lawyer amend the will to provide a trustee that could serve (without court intervention and unnecessary legal expense)?

And then there was the case of the lawyer who prepared eight wills for his client, and the client refused to sign any of them. When the lawyer finally understood what the client wanted and re-drafted the will, and then mailed it to him, he didn't follow up promptly to answer questions and arrange for its signing. The client died three weeks later, when a tractor rolled over on him.

If you don't have a Will, call your lawyer right now. Tell him (or her) to get started on your will and get it done within one week. Need some help? Call me. 815.338.2666. I'll work with you (and your lawyer) to get it done. And, yes, you can pay me for my help.

I recall well a 30 year-old client who was dying of cancer. He struggled to stay alive long enough to finish law school. I even got him more life insurance during his final illness, thanks to the Option to Purchase Additional Insurance, which allowed him to buy $30,000 of new insurance without answering any health questions. I told him to pay premiums monthly!

When I asked him where his Will was, he said he didn't have one! I asked who he'd like to be his lawyer, called her on the phone from the hospital room, and she was there by 5:00PM with the Will. When he started to read it and nitpick, I told him to sign it first; then he could nitpick. He did.