Joe Stamps Director of Life and LTC Sales
	Unfinished Business

I’m sure you’ve heard a few horrific estate tax stories about famous people like Elvis, Marilyn Monroe, J.P. Morgan, or even John D. Rockefeller. Their estate values were reduced by an average of 68% in passage to their heirs due to insufficient planning. A very interesting story was that of Henry J. Deutschendorf, Jr. Henry died in a plane crash in 1997. Henry wasn’t all that famous but he did have a large estate. It took Henry’s heirs untold amounts in legal fees, and a little over six years before they received any of his $19 million estate. By the way, Henry’s real name was John “Thank God I’m a Country Boy” Denver.

The moral to these experiences? A little planning can go a long way. It’s also true that you don’t have to be famous or ‘mega rich’ to inadvertently name the IRS as a major heir to your estate. So why have numerous studies shown that up to 70% of people don’t have a simple will? Well, obviously it’s not something people enjoy dwelling upon. However, in light of the fact that every actuarial table shows the probability of dying to be 100%, we have to admit that it’s reality. We’re all mortal, and a good estate plan can provide for your family, preserve your assets for future generations, and minimize taxes.

Federal tax on the transfer of estates has been on the books in one form or another since 1916. With the latest overhaul in 2001, our good friends in Congress have made estate planning a moving target. In fact, the way it stands now, if your clients have the good fortune of dying in 2010 (just kidding), their estate would pay no tax. Make it to 2011 and we’re back to a $1 million exemption and a top bracket of 55%. So what’s a poor planner to do?

I would ask your clients this question: "If there was a significant tax due on the assets of your estate, would you prefer it be paid dollar for dollar out of the estate, or would you rather use someone else’s money and leave yours for your heirs?" Now it’s a given that we need to take advantage of the current exemptions and set up a trust fund, but the bottom line question is if there is a tax due, what’s the best way to pay? Pennies on the dollar, discounted dollars…whatever you like to call it. “And as well, Mr. and Mrs. Client, consider that if you qualify for this other money and we happen to exceed this and don’t need some or all of it, we can just give it to your heirs as well.” A much better option.

Lifetime gifts, credit trusts, ILITS, and a myriad of other options are available and should be pursued with the help of a qualified attorney. While these instruments can be effective at taking money off the estate tax table, there is only one product that puts money on the table to pay estate taxes if they are due, and that’s life insurance.

CRP’s Life/LTC division has a wide variety of technical tools to help your clients assess the potential liability of their estate. Call us today and don’t let this happen to your clients estate.