Recent Estate Planning Survey Speaks Volumes

Revealing Survey

A recent CNBC millionaire survey uncovered some very revealing metrics related to high-net-worth families and their attitude towards estate planning. In short, the survey concluded that nearly 40% of those with in excess of $1 million in assets have not taken advantage of the financial expertise offered by a financial planner or estate planning professional in order to establish an estate or wealth plan. This revealing survey also concluded that the other 60% of millionaires or those with a high net worth have indeed established some type of substantive estate plan. Ubiquitously, large numbers of business savvy affluent families are surprisingly not taking the necessary steps to protect their loved ones or to provide heirs with future financial stability.

Polling Sample

With up to 40% of affluent families missing out on the benefits associated with estate or wealth planning, the CNBC.com article draws some intriguing conclusions. For example, when these metrics were further analyzed we found that families with greater than $5 million in assets or total net worth had a higher percentage of estate-planning savvy. In fact, almost 70% of those in this bracket were apt to have suitable estate planning in place. This is based on a polling sample of 750 millionaires. Surprisingly, the data produced by the CNBC survey also established clear political party lines between those who institute an estate or wealth plan as compared to those who do not.

Planning For High-Net-Worth Individuals

The data and the estate or wealth planning article report that those with a Republican affiliation were more likely to establish an estate plan as compared to those who consider themselves to be Democrats or independents. Silver Rock Partners provides expert estate planning for high-net-worth individuals and affluent families regardless of political affiliation. However, this data offers an interesting perspective on financial planning matters and how those with different political views may take varying approaches to protecting assets for distribution to heirs in the future. The article goes on to talk with experts in the field who have concluded that as a result of continual changes in the federal estate tax laws there have been a growing number of individuals who are experiencing what the article refers to as “estate-planning fatigue.”

Protect A Legacy

Simply stated, the turbulent environment with respect to estate taxes has driven many high-net-worth individuals to postpone or put off establishing an estate or wealth plan. This may be due to the fact that the new federal estate tax exemptions allow a couple to gift up to $10.86 million in a tax-free fashion as of 2015. The confusion comes from the thought process of many people who believe that high exemptions negate the requirement for an estate plan. This is simply not the case in light of the fact that planning an estate properly can protect a legacy for many generations. Another angle that must be considered in states like New York is that of state levied estate taxes. State levied estate taxes are a concern because they are triggered at much lower thresholds as compared to federal estate taxes.

Planning Appropriately

A carefully orchestrated estate or wealth management plan provides for powerful tax efficiency but goes far beyond that as well. It is organized documentation that is intended to protect assets, provide for heirs and described one's final wishes as they relate to end-of-life decisions. In short, this type of planning can prevent the confusion and disparity associated with family members who are left guessing what to do after a loved-one has passed. This is especially true with regard to families that have minors or young children still in the home. Planning appropriately for such things as guardianship and setting up trusts for any property that a child will be inheriting can make the lives of those still living easier and more manageable.

Medical Power Of Attorney

In the absence of a quality estate or wealth management plan, the courts will typically decide who will care for children when a parent or both parents become incapacitated or die unexpectedly. Equally important is to establish a medical power of attorney. This key document authorizes a specified person to make healthcare related decisions on behalf of the principal in the event there is some type of tragedy, incapacitation or even cognitive impairment. In most instances a married couple will designate the other spouse as the medical power of attorney. Other similar medical documents include an advanced medical directive for physicians or something known as a living will. This document makes clear one’s wishes in reference to end-of-life type medical treatment. Concurrently, a HIPPA form should be included as well. This form grants a power-of-attorney and identifies those who will be able to access a principle’s medical records.

Protect Assets

In addition, a durable financial power of attorney is typically also required. This document will identify those who will manage a principle’s money if they are unable to do so on their own. It is also important to note that while estate taxes have recently stabilized and become more favorable for the wealthy, marginal tax rates have increased noticeably. As such, it is essential to consider estate tax efficiency and the benefit of such tools as trusts as a way to protect assets. The goal is always to leave heirs with the most financial assets possible. This is important because greater financial resources will enable heirs to pay estate taxes and cover the costs of living. As a note of caution, it is always advisable to work with an experienced NY estate plan advisor to determine whether or not a trust is the best option. In fact, the CNBC article points out that some affluent families are choosing to remove assets from a trust and as an alternative give them outright to heirs. This decision is solely based on income tax implications.

Changing Income Tax Laws

In conclusion, the CNBC millionaire survey and the article found here reveal the paradigm shift that is occurring in the estate-planning world. It also provides clear insight into the importance of estate or wealth management planning as a way of protecting assets over the long term. With a turbulent estate tax environment and changing income tax laws, working closely with an experienced New York estate advisor simply makes smart financial sense. Silver Rock Partners is dedicated to providing affluent families and high-net-worth individuals as well as foreign nationals with the education, knowledge and tools needed to navigate the turbulent waters of today's modern estate planning. If you or someone you know is suffering from “estate-planning fatigue” contact Silver Rock Partners to schedule an initial free consultation.