Priorities Quiz


As you read through the Estate Planning Priorities, give each result a priority rating of Irrelevant, 50/50 or Essential. This lets us know how important each of these issues is to you and will guide the choices we will make together to create your estate plan.

  • Every adult American (i.e., at least age 18), is responsible for making his or her own personal, health care and financial decisions. If a serious accident or illness left you legally incapacitated, then who would make fundamental life (and death) decisions for you? Who would make important medical decisions, pay your bills and even file your taxes? If you do not designate someone to make these decisions on your behalf, then someone will be appointed by a judge through a guardianship process that can be expensive, time consuming and invasive of your privacy.
  • Each of us has a choice in how our estate (i.e., all of our assets) is transferred when we die. There are two methods by which your estate can be transferred to your loved ones 1. Probate; or 2. Probate Avoidance. Despite what you may have heard, read or even experienced following the death of a family member or friend, each method has its benefits and pitfalls. The Probate method may be more expensive (especially if you own real estate in more than one state) and it will make public your private matters (e.g., who is inheriting what, when and how). In reality, however, either method can basically achieve the same end result, especially if you have kept accurate, up-to-date records regarding your assets and your liabilities, have identified where those assets are and who your professional advisors are, and have identified where you keep the originals of your estate planning legal documents. In short, one of the fundamental keys to estate planning success is organization and recordkeeping.
  • Children are the greatest treasure of a parent. While you plan to see them reach adulthood, unfortunately that does not always happen. So, what if a serious accident or illness claimed your life before your children reached age 18? If they had no surviving parent, who would rear them to adulthood with your beliefs and values? Answer: Either someone you appoint in advance through proper legal planning, or someone selected by a judge (who likely does not know you and your family).
  • Do you have any specific assets that you would prefer to earmark for someone in particular? For example, should an adult child who has worked with you in the family business inherit that business instead of his or her siblings who pursued other career paths? Maybe you have some real estate that has been in your family for generations. What about family heirlooms?
  • Are there any charities that are important in your life? Likely, they are the ones you are supporting right now. If they are important to you now, would you want to provide for them from your estate, too?
  • Under the current law, each individual may transfer up to $5.49 million (indexed for inflation) without incurring federal estate taxes (the federal exemption). This amount will increase each year because the law provides that it is indexed for inflation. It is projected to be approximately $6 million by 2019. If your estate is greater than the federal exemption, the federal estate tax will be imposed at a 40% rate.
  • If you were to predecease your spouse, would you want to protect your surviving spouse and your children in the event your surviving spouse remarried? Generally, the main purpose behind such planning is to protect the children of the original marriage from being disinherited unintentionally as a result of the influence of a new spouse.
  • Some children become adults and some just get older. Enough said. And, it may not be your children who would instigate trouble. For example, in-laws can become outlaws. Sometimes, however, making your intentions clear through proper legal planning can short-circuit problems. For example, making clear Specific Bequests (see #4 above) can avoid misunderstandings later.
  • By far, the simplest method to leave an inheritance is Outright, directly into the name, hands and social security number of your intended recipient. Once the estate is closed it is theirs, for better or for worse. For extremely “simple” circumstances, this may be an appropriate approach, especially if the recipients are responsible, financially mature and the risk of squandering, divorces, lawsuits or bankruptcies is low. However, if you want to ensure the inheritance stays in your bloodline, then this would not be the recommended approach.
  • Perhaps you would prefer an alternative to the Outright method of distributing your estate, but still do not want to be “ruling from the grave.” If this reflects your thinking, then Partial Protection may be the appropriate Estate Planning Result for you. Instead of the inheritance passing in one lump sum, the eventual Outright distribution(s) would occur when you choose. You may direct that one distribution of the entire principal occur at some future age or life event of the recipient. Alternatively, you may direct that multiple distributions of principal take place at set ages, or upon the occurrence of certain life events. For example, you could direct that distributions be made with one-third (1/3) at age 25, then one-half (1/2) of the balance at age 30 and the rest at age 35. That way the recipient has multiple opportunities to succeed (or fail) regarding the inheritance and you are not “ruling from the grave.” However, as with the Outright method, if you want to ensure the inheritance stays in your bloodline, then this would not be the recommended approach.
  • If the Outright and the Partial Inheritance Protection do not meet your objectives to protect the inheritance from and for the recipient, then the Full Inheritance Protection may be the appropriate Estate Planning Result for you. Depending on the design specifics you would select, this arrangement could protect the inheritance from squandering, divorces, lawsuits and bankruptcies. Unlike the Outright and the Partial Inheritance Protection methods, this Full Inheritance Protection is appropriate if you want to ensure the inheritance stays in your bloodline.
  • Is a significant portion of your wealth in retirement plans such as IRAs, 401ks, TSPs or 403bs? Do you want to prevent your child or children from withdrawing your entire retirement fund balance in a lump sum to pay for expensive houses, automobiles and exotic vacations? If he, she or they are responsible and financially mature, then this may not be of concern. However, if you are concerned, then you will want to ensure the longest possible stretch period for the withdrawal of the retirement funds. In other words, the IRS wants to see the retirement funds paid out more and faster, while taxpayers want to see them paid out as little as required and over the longest possible period. This can be one of the most complex areas tax planning.
  • If you have family member with special needs, then you are well-aware of the need for special planning for his or her future. Proper planning can ensure their uninterrupted eligibility for public assistance, their long-term financial safety net and that any remaining inheritance will remain with your bloodline rather than pass to the government. This applies to the planning of grandparents and perhaps extended family members, as well.
  • An inheritance can be a blessing or a curse for the recipient. For instance, if you leave an inheritance to anyone with an addiction, then most likely what you intended as a blessing will become a curse. Accordingly, you may want to consider protecting the recipient from the inheritance and preserving the inheritance to help them get sober and stay sober.
  • Do you have any pets that rely on you for food, shelter and companionship? If yes, what would happen to them without you? The law allows you to make arrangements for their lifetime care, with any funds remaining designated to pass to the people and/or charities of your choosing.
  • Long-term care is expensive. According to commonly cited statistics, if you are age 65 and single, odds are about 50 percent that you will need long-term care. If you are age 65 and married, odds are about 75 percent that you or your spouse will need long-term care. The average stay is 2.5 years. Nationally speaking, the average cost is $90,000. How will you pay for it? Contrary to popular belief Medicare or Medigap do not pay the bill. Is this a concern to you? If yes, then the earlier you plan, the more planning options will be available to you.
  • In certain circumstances, more planning than Stretch IRA – Basic (see #12 above) planning is required, if you want to ensure the longest possible stretch period for the withdrawal of the retirement funds. This especially is true if there is great disparity between the ages of your eldest and youngest beneficiaries. This can be one of the most complex areas tax planning.
  • Our clients are typically aware that life insurance is “tax-free.” Unfortunately, that is only partially true. If you own your policy or even retained the right to change the owner and/or beneficiary, then you have “incidents of ownership” and the IRS will include the value of the death benefit in your taxable estate subject to Death Taxes (see #6 above). As a result, your life insurance potentially could create an Estate Tax where there might not otherwise be one.
  • If the value of your estate exceeds the federal estate tax exemption (See # 6 above), then additional planning methods may need to be considered to minimize the impact of Estate Taxes. Also, depending on the size of the estate, advanced techniques may be required to reduce the estate value now without relinquishing control, so there will be less estate value subject to Estate Taxes later on. This Estate Plan Result applies to single clients, as well as to married clients.
  • Some 90 percent of all American businesses are family business. At any given time, about 40 percent are in the process of transferring their ownership. Unfortunately, two-thirds (2/3) of all initial transfers fail. Of the one-third (1/3) that survive the initial transfer, only one-half (1/2) will survive the second. The reasons for this dismal success rate are as varied as the businesses and the business owners themselves. Nevertheless, many of the failed transfers can be traced to three (3) causes: cash, taxes and people. Fortunately, proper planning in advance can avoid these disasters for the businesses and the families who own them.
  • Do you have a special retreat, a vacation home, where you and your family have made many wonderful memories over the years? If yes, when you are no longer around to enjoy the property, would you want it to continue in the family? If it is important to you to preserve the property and maintain family harmony, you should plan for the proper maintenance and ownership of the property. Simply transferring it to your children could lead to disagreement among the new owners, or forced sale due to divorce or creditor claims. Perhaps you want to grant a right of first refusal among your children to purchase the property before it is offered for sale to a third party? On the other hand, you may want to create an arrangement to keep the property in the family for multiple generations and provide for maintenance, taxes and insurance?
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