The Great "Will" Myth

Families are constantly reminded about the importance of creating a will to define how assets will be transferred to heirs. It seems like common sense, however many people delay the process thinking the inevitable will never come. To further compound the problem, most people have been led astray, thinking a simple will is the only instrument necessary for the transfer of assets upon death. Why is this scenario flawed?

Many people do not fully appreciate the difference between a well thought out estate plan, designed for wealth preservation in contrast to a will which is established primarily to name the benefactors of the deceased assets.

Lack of knowledge and poor planning usually becomes apparent at a time when heirs are faced with the loss of a loved one. Today, families are so involved with everyday life and their individual welfare. They don’t take the time necessary to prepare properly for the preservation of an estate they might inherit.

Individualism is becoming more prevalent and family unity seems to be looked at as a trait of the past. We often see potential heirs struggling and working to maximize returns on investments but no thought is given to preserving the assets of parents or grandparents. This lack of attention to detail can be extremely counter productive. Let me explain!

Estate preservation plans are designed to pass on an estate to heirs in a manner which will preserve the total amount of the original estate. This includes sheltering the transfer of assets from the destructive forces of taxation. Many people believe taxation is inevitable and simply accept the consequences; without question. A study of families who have amassed great wealth discloses how strategic plans were put into place to ensure the amassed wealth was transferred without taxation, whenever possible.

Families often believe financial planning is a tool reserved only for the wealthy. This is also not true. Many times families don’t realize how a few dollars invested ahead of time can preserve thousands of dollars, later in life. The use of the word invest is pertinent because in the long term it produces a return much greater than the initial investment. Unfortunately many people look at the expenditure as a cost. For example, investing $5,000, to pay a good financial planner or estate attorney to create a plan for a moderate estate, could pay for itself many times over, in future years. Larger estates could see expenditures of much higher amounts, however the overall financial benefits to the heirs, makes this investment very lucrative in the long run.

In today’s economic environment, there is one other aspect of estate planning which is often overlooked. Estate protection! Unlike estate preservation, it is a method used to protect an estate, usually from the effects of a lawsuit. It is not uncommon to read about a family who has lost all their assets due to a minor accident involving a third party. Legal council for the injured party discovered the party at fault had a large amount of assets. If no estate protection entities had been established, the assets became vulnerable to a favorable settlement for the plaintiff. Always remember, attempting to protect assets, after the fact, is not legally possible. Estate protection plans must be implemented before a negative situation occurs.

In summary, financial planning encompasses many aspects of wealth creation. It is unfortunate that in our everyday attempts to create wealth many individuals overlook two of the most powerful wealth creation tools. Estate protection and preservation should never be overlooked.

Raleigh Makarechian RFC® FMM™, founder and co-owner of Wealth2020, Inc., obtained a Bachelor of Science degree in Accounting from the University of Michigan, Ann Arbor. Ms. Makarechian has been in business and financial planning for over twelve years. As an alternative investment specialist, she reviews an investor’s entire portfolio and maps out a strategic plan to maximize investment returns and minimize tax consequences, during the entire life of the plan. She lectures on a regular basis to other professional investment groups and community social groups throughout the US.

She and her partner Jerry Gallegos have just completed their new book, Create Wealth On Auto-Pilot.

To learn more about investing, protecting and preserving wealth go to http://www.wealth2020.com

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