Well, here we go again.

That estimated $300 Million value for the size of the estate was pared down by the IRS to “only” $162 Million. That’s still way more than the $82 Million trustee Comerica Bank presented when it submitted their assessment. As we predicted in our last blog on this story, Comerica bank is now headed for court to defend its position.

Whatever the final amount turns out to be, a lot of money is at stake.

Problem

Last April the bill for all this was reported to be at about $45 Million. I doubt that number included the $30 Million or so due in taxes. If the government gets their number, we can add another $39 Million to the tab…

At last report, the heirs were also headed to court. They were looking to have some of what’s left dribble over to them as well. (All of that $45M went to others.)

At some point in the future, we’ll be able to report some real numbers. Whatever they are, you can expect the smallest percentage will have gone to the beneficiaries.

Solution

An ounce of prevention or a pound of cure?

Whether your estate is $300 Million or $3 Million, it doesn’t have to be this way.

  • It doesn’t have to be public.
  • It doesn’t have to take this much time.
  • It doesn’t have to be this costly.

Net worth always looks bigger on paper. That’s because it’s so easy to ignore the hidden mortgage of settlement costs and taxes. Here’s a story to illustrate the point I’m making. (Just add zeros as necessary to make it fit the situation.)

Fred was a very happy guy. He’d gone out and made $200. After he paid his expenses and taxes he had a whole $100 left over. Having that $100 in his pocket made him feel secure.

Then the Big Bad Wolf came along and billed his estate for $65. Fred’s actual Net Worth was really only $35.

It would have cost Fred $1 to have his advisors build a house of stone to keep the Big Bad Wolf out. But then Fred would only have had $99 in his pocket.

His family, however, would have gotten the $99, not the $35.

Put another way, the score could have been: Family, $99  Big Bad Wolf, $0.

If Fred fully understood this, why would he not have done the planning?

Outcome

Knowledgeable, competent advisors only seem expensive when people like Fred don’t look at the whole picture. The outcome of good advice is always a bargain.

It’s too late for Prince. We’ll all be able to see the outcome in the news someday.

It’s not too late for the clients we serve. Let’s redouble our efforts to protect them and the people they care about in the best way possible. That should include writing a will, and other major estate planning steps (such as reviewing their existing life insurance policies).

The insurance world can be difficult to navigate. Without a clear understanding of their current plan, it’s difficult to be certain that your clients have the right coverage. If you’d like to take a closer look, you’ve come to the right place. We can answer your life insurance questions and provide the clarity you need to sleep easy. To learn more about our services, visit our site or join our newsletter today. To contact us, click here.

 

The post Blog first appeared on Stratus Financial Partners.