Over the last 38 years of practicing in the Estate Planning arena, I have grown with my clients, intellectually as well as financially. And the only attorney that would discount the value of experience would be a young attorney that doesn’t have it. I can say with absolute 100% surety that there is a huge difference in doing an Estate Plan for Mr. and Mrs. Thurston Howell III, versus a simple Estate Plan for Gilligan.
Like many of you, I grew up watching “Gilligan’s Island”. I was a “Mary Ann guy”, although Ginger was fun to look at. I was enamored with how smart the Professor was and really enjoyed the slapstick comedy between Gilligan and the Skipper. But even back then I was destined to be an Estate Planning Attorney and my favorite characters were the Howell’s. Thurston and “Lovey”. I wish I could remember more of their great one liners, but I always remember “that a Howell does not run in the face of danger! But he walks very quickly”.
Here’s a list of a few of the things that the Howell’s must consider and are likely to do, that Gilligan need not consider.
- There is no doubt that the Howell’s were quite wealthy and had a “Taxable Estate”. Adjusted for inflation, if they were alive today, no doubt each of them separately would be worth in excess of the $12 million Federal Estate Tax Exemption for a single person and $24 million for a married couple. Gilligan, probably lived on the boat with the “Skipper”. He was a man of modest means. The Howell’s must embrace strategies to reduce their potential 40% Estate Tax liabilities at their deaths. Gilligan on the other hand only needs to consider who inherits his motorcycle and guitar.
- Clients with larger Estates tend to embrace charitable giving and philanthropy as Advanced Tax Planning strategies. This is not to say that Gilligan wasn’t willing to “throw some money in the plate” each Sunday. But the Howell’s were more likely to create a Private Family Foundation and maybe embrace Charitable Remainder Trusts and Lead Trusts as they diversified some of their extensive holdings.
- Gilligan was less likely to need a Trust and his Estate Plan probably consisted of a “Simple Will’. On the other hand, the Howell’s, not only embraced using a Trust, but probably embraced a “multi-generational” Generation Skipping Trust. This is one of the most complex topics in all of Estate Planning. In Gilligan’s world, his biggest concern would be to look for simple ways to avoid probate. In the Howell’s more complicated world, one of their biggest concerns would be the Federal Estate Tax. Using a “Multi-Generational Trust” would not only save them Estate Taxes but would also save Estate Taxes for all future generations of Howell’s.
- The Howell’s would also have to worry about Capital Gains Taxes as they diversified their stock holdings and their business holdings. Mr. Howell frequently talked about his positions on the Board of Directors, etc. Many of these clients who are like the Howell’s tend to be business owners, or CEO’s of publicly traded companies, etc. They have huge Capital Gains issues when they go to sell and diversify these shares in the future. Most of these strategies have some form of a charitable component. A thorough understanding of Private Foundations, Charitable Remainder Trusts and Charitable Lead Trusts are crucial.
- Gilligan, with his modest means, the fact that he wasn’t married and didn’t have children, could probably prepare his Estate Plan online by doing some type of a “simple Will”. On his death, maybe he makes a list of his personal belongings and who they pass to. And maybe he appoints his brother as the Executor over his motorcycle and guitar. On the contrary, the Howell’s probably had a team of advisors. Input from their CPA (Income Tax Advisor), Financial Advisor, Life Insurance Professional, Trust Officer or Financial Planner. So many of the complex issues can be solved only by combining different strategies and perspectives. The competition between the Estate Tax and Capital Gains Taxes as well as Income Tax strategies and solutions must be carefully coordinated. What may be beneficial from an Estate Tax standpoint could be a huge mistake from an Income Tax standpoint.
- In Gilligan’s case, he may be able to follow an online discussion on Wills and complete his in a matter of an hour or so, maybe. On the other hand, the Howell’s will need to spend much more time understanding the issues, the tax problems they face and the different complex tax strategies that they should embrace.
Practicing at a higher level involves much more time, maybe 5 to 10 times more in the discussion and understanding and the coordination of the many strategies than in the actual drafting of the documents. Regardless of the size of your estate, call one of our Scottsdale Estate Planning Attorneys to schedule a free consultation.