Safeguard your clients from failing to planBlog added by Jeff Reed on June 6, 2012
Jeff Reed

Jeff Reed

San Diego, CA

Joined: May 07, 2012

I recently came across a list of the five biggest estate planning mistakes written by a CPA out of Florida. He makes some excellent points about the types of issues we face with our clients every day.

Why bring this up? Simply put, I share his opinion. Left to their own devices, our clients will procrastinate and take short cuts in their planning, even during the best of times.

But the larger issue, in my mind, is the fact that the problems created by procrastination this year will be magnified many times over if our clients allow the current favorable planning environment to slip through their fingers. The author focuses on some specific issues to illustrate his points, but I think they basically fall into one category — failing to plan.

Three examples of this from the article:

1. Succession planning — A plan that administers the orderly transfer of business interests at the time of retirement, disability or death.

2. Asset transfer planning — A plan for maximizing the amount of wealth transferred to the next generation from qualified plans and annuities held by generation one.

3. Estate planning — A plan for the administration of the estate, as well as estate liquidity planning/estate tax mitigation.

Fortunately, there are a variety of concrete action items clients can take to avoid these mistakes. They all involve getting off their backsides and taking action. Go figure!

Here's how we are going to make it happen:

Succession planning — We should all know the basics of buy/sell agreements and the lie at this point. But the place where we can really add value beyond providing simple term insurance to fund these agreements is to arm ourselves with the knowledge to use some of the more creative and effective permanent product solutions.

These create "double duty" dollars that provide maximum value even if the insured business owner has the audacity to live to retirement. That is the plan most of the time, isn't it? I have yet to encounter a client that plans on passing away early!

Asset transfer — Again, we all know the tax issues that qualified plan and annuity assets face when they pass to the next generation. I will touch on this further in future articles.

Estate planning — I have discussed the opportunity that 2012 presents in this arena previously, and now's the time to take action. All in all, 2012 is an exciting year, with plenty of opportunity for our clients to improve their planning and for our individual businesses to flourish.
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