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LETTER FROM THE EDITOR

Estate Planning Falls On Deaf Ears

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.

Consider this:

• 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 estate planning?

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

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Steve may be reached at [email protected] Follow him on Twitter @INNSteveM. [email protected].


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