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What do estate tax attorneys and financial planners have in common? Short,fat and bald? Maybe but not the answer I’m alluding to. They’re both working to keep the money you make in your family! Another good answer but still not quite where I was headed. It’s something that neither of them get, as in understand. Not because they’re not smart, but just because they don’t get it.

Let’s put things in perspective. If you have an estate attorney and a financial planner chances are you are working for more than minimum wage. Chances are really good you have a net worth of $5 million or over or that you make six or more figures per year. And chances are the attorney and planner aren’t working for minimum wage either. You are paying them a lot of money to do the right thing for you, to give you high dollar advice. For the kind of money you are paying them you don’t expect any screw ups and if there are any you don’t expect it to cost you.

Now allow me to share the dirty little secret about the professional handling your estate and finances. They don’t care if you happen to die without the proper trust in place or the proper planning done. They don’t even care if you die without any life insurance in force at all. With full knowledge that your estate situation needs, for instance, $2.5 million of life insurance they will tell you to put off purchasing that insurance until the trust is set up. I am working with two high net worth clients who need substantially more insurance than that and they have been waiting for the trust to be set up now for, respectively 5 and 11 months. Why the delay? These are high dollar, expensive people working for them. Busy, busy people.

So, what’s the problem? Good stuff takes time right? While I doubt it, let me just draw this back to the point. While they are working on that they have recommended that you don’t buy the insurance they say you need. They are recommending that you just chill while they prepare the bed for that policy to lie in. They are asking you to accept that people don’t die unexpectedly and lose their estates to estate tax.

Understand that most estate tax insurance is either very long term, or more likely permanent insurance. Let’s take a look at an alternative. They know if you die today you will owe $2.5 million in estate taxes and that your family will have to pay that amount within nine months. Using my almost 59 year old self that policy would cost just shy of $28,000 a year. It will cost $30,000 if I wait until I have an age change. If my health changes I may not be able to get insurance at all. Keeping in mind that you’re going to pay for that policy to age 100 or until you die, well, time working on that trust is likely to cost a lot of money unless you die quickly. But what happens if the attorney says, “you know, this is going to take a while so to make sure your estate is taken care of and your current wonderful health is locked in, get a 10 year term policy in force that will convert to the end product we need. Make it for $5 million to cover the fact that it will increase the size of your estate because it’s not in a trust.” That 10 year term policy would cost me about $10,000 a year. Buy term while you wait.

The fact that it’s not in a trust doesn’t matter because we increased the amount of insurance to cover that. The fact that it’s in force means that if you die unexpectedly (remember your attorney is suggesting you buy life insurance and life insurance is to cover unexpected death) your family can pay the taxes and keep your legacy intact. Financial advisers and estate attorneys get so wrapped up in numbers and legal stuff that they forget what life insurance is all about even though they are recommending that you buy it……after they get the bed made.

Bottom line. I’m not accusing these fine professionals of being a little slow on the up take, or maybe I am. Their advice to wait until the bed is made to buy insurance is stupid. It could cost your family everything your adviser is claiming to be helping you save. If you have any questions or think I’m a little to hard on the professionals I just took to task, call or email me. Let’s talk.