Investors are focused on making money. Unfortunately, many ignore the need to properly plan for how their estate will be distributed after death. Fortunately, Warren Buffett's plan to donate approximately $31 billion to the Bill & Melinda Gates Foundation has suddenly made estate planning an issue of keen interest.
Yet some continue to believe that estate planning is of concern only to the very wealthy. They think the primary purpose of estate planning is tax minimization. As long as the value of their estate is below a certain level, they believe there isn't anything to worry about. And since it looks like Congress will raise the tax-free limitation on estates, such thinking is likely to become even more entrenched.
However, tax considerations are not the only reason to have an estate plan. For example, an estate plan includes a will. If you were to die without a will, your survivors would have to deal with probate. Not having a will means that you are choosing to allow the courts to decide who gets what. What's worse, probate can take a substantial amount of time, and it could end up costing more than a good estate plan would have cost in the first place. Furthermore, while an estate is in probate, the heirs don't have access to the assets.
Yesterday, I had an interesting discussion with Anthony Barsamian, Managing Partner of Hutchings Barsamian, a Wellesley, Massachusetts law firm. Anthony specializes in estate planning. We talked about revocable living trusts, the House bill to raise the tax-free limitations on estates to $5 million, how much it costs to create an estate plan, etc. This MoneyMasters interview will be available for viewing tomorrow, July 13.