Wealth Protection

Do-it Yourself Estate Planning Poses Potential Tax Risks

Mistakes by investors can impact heirs’ inheritance

When Sopranos actor James Gandolfini died in 2013, he left a $70 million estate and a will that divided his assets between his spouse and children. That also left Gandolfini’s estate open to $30 million in taxes, partly because he only left 20 percent of the estate to his wife — assets bequeathed to spouses are non-taxable under federal law.

And while some financial professionals caution that Gandolfini could have had more pressing concerns than taxes — a CNBC report from 2013 notes that he may have worried about leaving his son from a previous marriage dependent on his then-spouse — the large sum of money gobbled up by the government still serves as a cautionary tale of finding and trusting the right estate planner.

“[Investors] don’t realize that they’re creating a tax situation on their own portfolio, which was unnecessary and wouldn’t have happened if they had a professional in the first place,” said Mark P. Becque, president of Green Valley Financial, referring to prospective clients who try to handle their wills and estate planning themselves.

Green Valley Financial, based in Green Valley, Arizona., provides customized estate planning solutions primarily to clients over 60-years-old, although Becque considers all prospects. The firm does not maintain a minimum investment level.

New clients can expect Green Valley Financial to ask them questions from top-to-bottom regarding their financial picture. For example, whether clients have a will, an estate plan, an education plan for their grandchildren, and more are asked of new clients and the answers are incorporated into their customized financial plan.

Investors often hesitate to take care of their estates and wills, Becque said, adding that it’s crucial to put a plan in place before the unexpected happens — notably, pop singer Prince, died suddenly in 2016 without a plan for his $300 million estate.

“I don’t have any idea why they would have put it off,” Becque said. “I ran across a very successful business owner just yesterday and they said, ‘By the way, do you have anyone on staff who can help us with our trust or wills? We don’t have one.’ And these are people in their mid-60s with a significant net-worth.”

Becque added that, often, privacy concerns trump common sense in estate planning. Soon-to-be retirees may be afraid to “divulge their personal information,” to an estate planner.

Clients of Green Valley Financial can expect personalized service, a focus on education (Becque runs several client seminars each year), and an estate plan that considers often omitted aspects of retirement planning, such as Social Security planning.

“[Social Security is] very much overlooked,” Becque said. “A lot of advisors don’t want to get into it because there’s no money in it … [But] it has a lot of value.”

To learn more visit: www.greenvalleyfinancial.com

 

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