Morningstar Advisor - October/November 2010 - 10

On Topic

What estate-planning strategies are you and your clients doing before the end of the year?
Let us know your thoughts at magazine_editor@morningstar.com
“At a minimum, we’re ensuring clients have completed the basic trust documents with powers of attorney for health care and assets. We also review their beneficiary but not a GST tax for 2010, and the rates for 2010 on gifting are at 35% versus a higher gift rate in 2011. Everyone needs Quick Poll (given Aug. 24; 1,017 responses)
1 Should the United States have an estate tax? Yes No Neil Brown Burkett Financial Services West Columbia, SC 62.9% 37.1%

forms on insurance and retirement plans to be sure the right people get

an estate plan, but we just don’t know what kind yet.”

we might use a Testamentary Charitable Lead Trust to defer part of

the money, not some prior spouse or other individual. It’s critically important to think through how much beneficiaries should get and when and how they should get it. For example,

2 If we must have an estate tax, what’s a reasonable rate (assuming an exemption of $3.5 million)? ,35% 35% to 45% .45% 64.8% 28.7% 6.5%

their inheritance, reduce the taxable estate, and benefit charities that are important to the client. Depending on the client’s views of how the beneficiaries might handle the money, we might then leave the money in trust, paying out income as needed rather than an outright inheritance. Most estate attorneys I know are hesitant to predict where taxes are going, so unless we have an estate far in excess of any likely exemption, we’re not

“We’re looking at making accelerated gifts in case Congress shuts down intra-family gifting discounts and the estate tax limit goes back to $1 million.

The estate-tax situation is very annoying. Most of those folks on the Hill

have gross estates in excess of $1 million. I can’t believe that they won’t get it together and do something about this. But they dropped the ball last year, so …”
Peg Eddy Creative Capital Management San Diego, CA

3 What are the odds that Congress will take action and pass a new estate tax by the end of the year? Sure thing 50/50 Little or no chance 9.6% 45.1% 45.3%

4 Do you do estate planning with your clients? Yes No 89.3% 10.7%

implementing immediate gifting
Robert J. Greenberg Greenberg|Graham Advisors Irvine, CA

or other strategies for tax purposes.”

“It’s a difficult question. As I see it, too many people let the “tax tail” wag the “family dog.”

5 How much does estate planning figure into your clients’ investment decisions? Very much Somewhat Not at all 22.6% 70.0% 7.4%

“I think it’s important to not overplan

It is far better to plan based on the family’s situation, first, and

or make changes until we know more what 2011 will look like. Will it be like 2009 or 2001? I once

would have bet on 2009, but now, I have no idea. We may examine late-year gifting to grandchildren, where a client has already used his or her unified gift exemption and where gifts being made in 2010 are above the gift-tax exemption. We think this could be beneficial. There is a gift tax

then back into whatever tax scenario is available. This is not to say that wealthier clients should not continue to make gifts, because if the gifts are made properly, they will be out of the estate of the donor no matter what the tax brackets are. At this stage, however, I would not get too fancy.”
Michael S. Saper Michael S. Saper & Associates, P.C. Chicago, IL

6 Do most of your clients take a “spend-it-now” approach to their estates or do they want to leave as much as possible to their children/ grandchildren and charity? Spend it now Leave it behind 34.5% 65.5%

10 Morningstar Advisor October/November 2010

Morningstar Advisor - October/November 2010

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