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Weiss Education May 2017


The Shell Game

As promised in my earlier articles, over the next few months I will continue to share a portion of my Special Report, The 10 Most Common Estate Planning Mistakes and How To Avoid Them. 

In this segment I will cover the second most common mistake people repeatedly make.

To order the complete report click here.

Mistake 2:

Failure to have any plan at all, or having an antiquated or improper plan.

Believing that politicians will pass legislation that will permanently absolve me from any responsibility to properly plan my estate.

As a young boy growing up in Sacramento we would go the State Fair every year.  The whole experience still is one of my fondest memories as a kid.

The corn dogs, cotton candy, the animals, the rides and the games.  One game in particular was more intriguing to me than the rest.  It was the Shell Game.

The game dates back to Ancient Greece and can be seen being played today on the streets of most major cities throughout the world.

In the Shell Game, three or more walnut shells, cups, or bottle caps are placed face-down on a surface.  A small ball or pea seed is placed under the shell and shuffled by the shark in plain view.  One or more players are invited to bet on which shell is hiding the pea.

“The Conjurer,” painted by Hieronymus Bosch.

For centuries the shell game has been notorious for the con with a planted accomplice consistently winning, encouraging innocent onlookers to place their bets and of course lose.

The pea in the game of estate planning is the dreaded federal estate tax.  The con artists are the politicians who continually use this potential tax bomb as a distraction to the real issue, which is crafting a properly designed strategic estate plan to determine who gets what, when they get it and how they get it.

I personally don’t believe there is any premeditation by Washington to distract us, but during my 45 year career I have witness the paralysis that estate tax bantering can cause.  And today, with the federal estate tax exclusion nearing $5.5 million, Americans are more likely to conclude that there is no need for planning.

One constant that I know as an estate planner is that tax laws are never permanent. I have seen the federal estate tax exclusion as low as $60,000 and the top estate tax bracket as high as 75%.

Because of the gigantic deficit, the growing government monster needs revenue. There are those that want what you have and there are no lobbyists in the cemetery, so don’t rest easy.

Estate Planning Commandment #1: It is the estate planning laws that are in place when you die that count, not what they are today. It is a fact that the rules will change.  .

As I write this article, President Trump’s tax plan that was laid out a few weeks ago, calls for, among other things, a repeal of the death tax.  The tenuousness of the President’s plan however raises a series of questions.  These include:

  • Whether the President’s plan would be coupled with the current step-up in basis at death rules versus a carryover basis (carryover would effectively increase total taxes for most married couples).
  • Whether the gift tax will remain intact (presumably it’s needed to prevent a massive erosion of the income tax base).
  • What will happen to the generation-skipping transfer tax?

Because these key factors weren’t addressed and the fact that the federal exclusion is so high, (net affecting only a handful of Americans), I am convinced that the estate tax is the pea under the shell.

It is the ultimate bargaining chip to be readily discarded when push comes to shove in favor of the administration’s higher priorities – such as achieving a substantial reduction in business tax rates, the repeal of the alternative minimum tax and the 3.8 percent Obamacare tax.

My advice in this day of uncertainty is to always remember Estate Planning Commandment #2Plan for the worst and pray for the best.  To keep peace and harmony in your family you need to be proactive and stop procrastinating.

I also want to emphasize that estate planning is so much more than estate taxes.  There are other taxes and expenses to consider when planning your estate. Most heirs will have to pay income taxes on all qualified accounts they inherit such as your IRA, 401k or 403b.

Furthermore, 20 states still impose an inheritance tax, some as high as 20%. The state of your domicile at the time of your death determines whether or not your children will be taxed!

Failure to plan for this tax could have serious financial consequences. To see if your state imposes an inheritance tax, call our office at 1-888-892-1102.

Another expense to consider is the cost of probate. Ranging from 3% – 10% it is calculated on your gross estate. This simply means that all mortgages and debt are included in the probate attorney’s fee calculation.

Assets that are inherited through a simple will are subject to probate. Assets that are passed via a beneficiary designation or by way of a Revocable Trust are NOT subject to the costs associated with probate.

With Trump as President and a Republican controlled Congress, one may logically put their guard down. Don’t be duped into believing that you now have plenty of time to plan. No one knows the day and hour.

Don’t be lulled into a false sense of security. Plan your estates immediately. Don’t wait another minute.

Solution: First, have your estate professionally analyzed. An unbiased personalized Estate Analysis can give you a peek into the future by taking a snapshot of your assets today.

Calculate your net worth, and then offer personalized suggestions on which strategies would work best for you in order to maximize your estate and minimize estate shrinkage due to federal and state estate and income taxes and probate expenses.

A well thought-out Estate Analysis will be the road map that guides you toward designing proper estate planning, allowing you to keep your wealth in the family, while maintaining control throughout your lifetime.

Competent estate planners are generally well equipped to do such an analysis. Estate Planning Specialists, LLC has analyzed over 5,000 estates of every size from every state in the union.

To complete your analysis profile form and order your own comprehensive personalized Estate Analysis simply go to our website:, or call toll free 1-888-892-1102.

Next month, Mistake 3:  Blindly leaving everything to your spouse because of portability.  To immediately discover all 10 mistakes you can order my comprehensive report by clicking here.

Until next time,

David Phillips

David T. Phillips is CEO of Phillips Financial Services and founder and CEO of Estate Planning Specialists. Mr. Phillips is a nationally recognized consumer advocate for insurance, annuities and estate planning with over 42 years of experience. He is the author of bestselling books and has been a featured on national television including: CNN, Fox News, CNBC, Money Talks, and Bloomberg.

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