I don’t normally review books on personal finance for this blog, but I decided that perhaps it was time to read something about estate planning. The odds are overwhelming that within the next 30+ years someone is going to inherit the fruits of my earthly labor.
Although I come from a family of pretty compulsive planners, I am decidedly less so. Yes, I have taken care of the basic documents. But, as the authors (Robert A. Esperti, Renno L. Peterson, and David K. Cahoone) convincingly argue in Protect and Enhance Your Estate: Definitive Strategies for Estate and Wealth Planning (McGraw-Hill, 2012), I haven’t done nearly enough. In fact, in some cases I may have done the wrong thing. And you may have too.
This paperback devotes 43 chapters to a wide range of topics. To mention just a few: probate, step-up in basis at death, the revocable living trust, disinheriting (or, the more loving alternative, planning for) a spouse, planning for unmarried couples, discounting the value of your estate, and giving it to charity.
The authors outline the pros and cons (mostly cons) of wills. Instead of using the will as the cornerstone of estate planning, they argue that “estate planning professionals should use the revocable living trust as the main or foundation document to accomplish most of their clients’ estate planning objectives.” (p. 94) It’s not just for the 1%. The revocable living trust has a host of benefits. For instance, not only can you give what you own to whom you want, when you want, subsequent to your death. “A revocable living trust can control, coordinate, and distribute all your property interests while you are alive, if you become disabled, and on your death.” Property placed in such a trust does not pass through probate, and “continuity of cash flow and investments in your portfolio is not interrupted by your death.” (p. 95)
The authors, all lawyers, explain some of the intricacies of current federal tax law as it relates to estate planning. Of course, tax law is constantly changing, but the authors’ guidelines are extremely useful.
They also list techniques people often employ that don’t always work—such as cross-ownership of life insurance, joint tenancy, Minors Act custodial accounts, and general powers of attorney. Then there are the gimmicks that never work. Hiding property in a safe-deposit box falls into this category.
The book is sweeping yet thorough, clearly written, and potentially worth its weight in gold for the high net worth individual. I can’t measure it against other estate planning books since it’s the first one I’ve read, but I learned an enormous amount from it. Of course, as the authors stress, reading this book is no substitute for hiring a professional to help you plan your estate. Estate planning should not be a do-it-yourself project.