Don't Think You Need an Estate Plan?
Think Again
By Paul M. Glowienke, MBA Northwestern Mutual Financial Network

You've been accumulating assets and saving since entering the workforce. The question is, Do you have a plan in place for these assets after your death? If you're like most people, you don't think you need an estate plan. Do any of these reasons sound familiar?

I don't have enough assets to worry about estate taxes.
Forget taxes for a minute. There are a number of non-tax reasons for estate planning. If you have not done any planning, state law determines where your assets will pass when you die. There is no guarantee the legal system will make the same decisions you would have made. Putting your directions in your estate plan is the only way to ensure that your wishes are followed.

Let's assume assets would be distributed just as you would like. There are still several reasons to plan. First, in your will you can determine who will handle your estate when you die - called the personal representative. A will also allows parents to nominate who will take care of their minor children. Although the court makes the final appointment, naming a guardian ensures your wishes are known, and in most cases, followed.

I already have a will.
Some situations are more complex and may require more than a will. Non-traditional family dynamics, tax planning issues and privacy concerns might be better handled through a trust. Marital property agreements clarify ownership of marital and individual property. Even if your will plans for the distribution of property, don't forget to address incapacity. You should consider naming someone as the financial power of attorney to handle your monetary affairs. Also consider naming someone to be your health care power of attorney to make health care decisions should you be unable to make them yourself.

Don't Need An Estate Plan?

The estate tax has been repealed.
It's true. The estate tax has been repealed, but so far applies only in 2010. Over the next several years, the amount that can be passed at death free of estate tax will increase and the estate tax rates will decrease. In 2010, the estate tax is repealed but is replaced with income or capital gains tax. The following year, the changes will "sunset" back to the original estate tax law of 2001. So, if you don't want your heirs to pay taxes on your estate, you'll have to die in 2010.

The future of the estate tax is uncertain at this point. However, without planning you have no assurance that your wishes will be followed or your goals accomplished. It's better to put a plan in place and make changes as they're needed.

Because everyone's situation is unique, it is important that you work with planning professionals to be sure your goals are met. Financial representatives and estate tax attorneys can help you prepare a plan that meets your objectives and helps reduce or eliminate your taxes, create liquidity for any taxes that are due and help keep your estate intact for your beneficiaries. More importantly, planning helps ensure that your affairs proceed properly when you're no longer in control - perhaps the best peace-of-mind of all.

Paul M. Glowienke, MBA
Financial Advisor
1500 Quail Street, Suite 600
Newport Beach, CA 92660
949.863.5803 voice
949.863.5940 fax
949.466.5800 mobile
paul.glowienke@nmfn.com
CA LICENSE # OD80981
www.nmfn.com/paulglowienke

(Winter 2007)