I recently received my quarterly edition of an investing magazine that is produced by a well-known brokerage firm. To give them credit, the magazine typically has very good articles, and they are at their best when they focus on investing. Unfortunately, the same cannot be said for one of their recent articles, which was written on estate planning. Investing and financial planning are completely separate from estate planning. True, they ultimately should go hand in hand but I caution you to be leery of who is giving the advice and the type of advice that is being given.
May I share an example of what I mean from this recent edition of the magazine? There is an article, well-intentioned I am sure, written by a Vice President of this brokerage firm. His brief biography mentions that he is a Certified Public Accountant (CPA). His article, among other things, has a subject heading that states, “Protect Your Estate.” Under that heading he correctly points out that if someone does not have an estate plan, their estate is possibly subject to three not-so-fun things: (1) the determination of where your assets will go and/or who will care for your minor children is subject to the decision-making of a Judge; (2) the estate value might be dwindled due to taxes and attorneys’ fees; and (3) the estate may be subject to probate which is a complex and time-consuming process.
The very first solution that is offered to remedy those three situations is to update your will. With all due respect to the author of the article, the creation and/or updating of your will does not protect your estate from any of those three mentioned dilemmas! First, a will does in fact state where you want your assets to go and who the guardians for minor children should be. But the will still must pass through the hands of a Judge for that to occur and it can be contested during this process. Second, probate is not cheap and a will does not protect an estate from having to pay taxes. And third, the term “probate” itself means “to prove a will,” so by having a will and over $50,000 of assets (in Arizona) in your name alone you are pretty much guaranteeing yourself a trip to probate court.
Again, to give the author credit, the remaining steps in his article are helpful. Some of the other suggestions include obtaining the proper Power of Attorney documents, establishing a revocable living trust, and making sure your assets are titled correctly for your particular circumstances. I could not agree more with the suggestion to create a revocable living trust, but that is an entire blog article for another day. There may be circumstances where a will is the best vehicle for a particular client, but let me be clear – a will does not protect your estate from a Judge, fees, or probate!
For the time being, I simply caution you to look at who is giving advice and the type of advice being given. You will never find me telling my clients how to do their taxes or how to invest their money. That is not my area of expertise. The focus of our firm is solely on estate planning, and I’d encourage you to make an appointment today for a free consultation to determine which estate planning method is best for you and your circumstances.
For more information or to schedule your free consultation, contact our office today at 888.222.1328