On Death, Taxes, and Estate Planning

Today is October 16th. I just had a client fax me his signature documents, hoping that a day late isn’t a dollar behind. He’s getting a refund, so it won’t be that big of a deal.

October 15th and 16th are always difficult days for me. In 2006, my father passed away on the evening of October 15th. That was a Sunday night, so the tax deadline was the next day. I only had one tax return left to file, and I did that on Monday morning, October 16, before heading to my mother’s home near Los Angeles. By contrast my firm likely filed over 100 returns yesterday. Most of these returns had already been completed (we were just waiting for signature documents), so it was just pressing buttons.

But that’s not the point of this post.

I want to talk about our mortality. We are mortal. At some point in the future, I won’t be here. Thanks to the Internet, my words will be here. My family will be able to see pictures of me, but I won’t be here. That’s reality.

Back in the early 1990s my parents met with an estate planning attorney. They had a will, but my parents owned a home in an expensive area. It was likely that upon death 55% of their assets would go to the estate tax. They sought professional planning, and regularly met with the estate planning attorney to update the plan. When my father passed away, my mother had almost no economic worries because they planned well.

I sought professional planning a few years ago. I own a home, and while the estate tax exemption today is over $5 million, it could be just $1 million in 77 days. Look at your assets. Consider the value of your life insurance, the value of your 401(k) or IRAs, the value of your home. Is it over $1 million? And even that $1 million figure is too high in some areas. Some states have estate taxes, and they can begin at levels well under $1 million.

Do you have children? You have a will, of course, even if you haven’t written one. Everyone does, courtesy of your state. If you don’t want the state choosing who cares for your children should something happen to you, get professional help today. Make that appointment now.

I’m often asked about inexpensive services, such as LegalZoom and store-bought will kits. You get what you pay for is a common theme of the world. If you have a simple estate, and you’re not likely going to be subject to an estate or inheritance tax (yes, some states have inheritance taxes), and all you need is a will to make sure that your children are cared for by the ones you choose, this may be a possible choice. For anyone else, spend the money and seek out a local estate planning attorney.

Estate planning is a touchy subject, in that we feel immortal. But we’re not, and as the saying goes, “There but for the Grace of God go thee.” Life is fleeting and temporary, but the wealth you’ve earned doesn’t have to be. Get good planning. If you are one of our clients and would like a referral to an estate planning attorney, contact our office and we’ll put you in touch with someone local to you. This is definitely an area where local advice is necessary. When I moved from California to Nevada, I found that much of the paperwork that I had needed to be redone. This was especially true with my health care directive; Nevada law is different from California law.

Whether or not you believe in the hereafter, sooner or later you won’t be here. While my hope is that all my clients will outlive me (while I live a normal lifespan, of course), the cold hard reality of statistics refutes that. Like the tax filing deadline, you can’t make changes to your estate plan once you’re gone.

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