It’s what you keep

I recall something I read several years ago.  I’ll paraphrase…

If you’re going to pay for investment advice, start with good tax advice.

I was listening to an estate planning program on PBS while working in the garage. The speaker charmed his audience with anecdotes and analogies. His advice was decent enough:

  • Pay attention to the beneficiary forms for your investments.  Especially for 401K and IRA accounts.  These trump wills and have important tax advantages upon death.
  • Spouses should consider bequeathing some assets to  non-spouse heirs to benefit from the $2M estate tax exclusion. (Note: I’ve not fact-checked this amount).
  • Consider life insurance and annuities.   Life insurance for tax-free inheritance, annuities for the possibility of living much longer than you expect (say to 100).
  • If you don’t plan, guess who is likely to take most of the estate…. the government and the nursing home.

First, these are valid points.    Second, this type of planning ranks right up with dentist visits, cleaning the bathtub, and proctology exams on the fun scale.

Nonetheless I’ve seen first-hand the impact of helpful decisions (smart IRA beneficiary choices) and unhelpful ones (no will, hard-to-find financial information, social security snafus, nursing home challenges).

If you wish to leave the most to your grandchildren, heirs, charities, then estate planning is a must.  Boring, yes.  Important, yes!

Additionally, tax planning is helpful not just for the deceased, but for the your day-to-day life.  I’ll touch on that in my next blog.

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