That muffled roar you hear? The sound of exploding estate
plans. The confluence of events ensures that many families
will be left picking up the pieces to provide for their future,
children and businesses. You can be as sure of that as you are
certain Charlie Sheen needs medication.
• 35 percent of Americans in 2009 had a will. That was
down from 45 percent in 2007.
• 29 percent had a power of attorney for finances or health
care in 2009, down from 45 percent in 2007.
• 18 percent had trusts, down from 31 percent in 2007.
Those are the sobering results from a poll that Harris Interactive
did for Lawyers.com. It's the latest survey Harris did
on the subject, but it is unlikely Americans did much better
in 2010 or this year. Hey, people aren't buying more life insurance-
why would anyone think they would be doing more
Experts blame the economy. After all, many people are still
woozy like passengers swaying on the deck of a ship that's
sailed through a hurricane. They are thinking about stability
today, not security for tomorrow. Advisors have to remind
clients that their families depend on them-that as tough as
times are now, they would be even worse for their loved ones
having to do without a main breadwinner, too.
We all know that's a tough job, serving up a cold plate of
mortality for a client you care about. That's why many of our
readers love our annual Estate Planning Failures of the Rich
and Famous. It's not easy to talk to someone about drafting a
will, but you can talk about the case of NFL quarterback Steve
McNair. Because he did not leave a will, his widow had to beg
a probate judge for money. His estate also dragged through
probate court from 2009 until this year, leaking value through
legal costs along with the estate taxes McNair did not plan for.
Clients might also be a little nervous about setting up trusts,
afraid of giving up control. But you can point out how it can
give people more control-even beyond the grave. In McNair's
case, he could have decided when his sons receive their
inheritance. A court gave it to them while they're still under
18. His widow had to ask the judge to set up a trust for them
to get it at 18. Of course, that's still not ideal. Many 18-yearolds
inheriting millions of dollars would not live to see 19.
Then there is the privacy that a trust offers, because it
bypasses the public scrutiny of probate. The family of Walter
Cronkite would have appreciated that. After he died, the
press discovered Cronkite didn't leave anything to his girlfriend
(you read that right-92 years old and had a girlfriend!).
So the New York Post blasted one of its classic headlines-
Walter Jilt$ Gal Pal.
Even advisors to the rich and maybe not so famous are having
trouble getting their clients to plan their estates. True, the
recent estate tax bill was a good step toward clarity, but it was
also two giant steps back.
That's because the exemption is high, at $5 million for an individual
and $10 million for a couple, and also because it is only
for two years. Producers and estate-planning attorneys said
estate-planning slammed shut for many people at the end of
2010 because clients found they were under the limit. Even
people over the exemption decided they didn't need insurance
for the estate tax bill because there might not be one. After
two years, the exemption could be even higher, they reasoned.
Two other features in this issue address those problems. Contributing
Editor Linda Koco explores the issue with estateplanning
experts and outlines opportunities in her InFront
column. And in one of our life insurance articles, Gonzalo
Garcia, CLU, and Liz Weber, JD, team up to explain how to
use the two-year window as a sales tool.
So, enjoy the articles, along with the pull-out insert detailing
this year's edition of estate-planning disasters and help your
clients get it right