Estate Planning Advice for the Some of the Ten Million Millionaires in the World
HartfordBusiness.com reports that the world now has ten million millionaires (“World now has 10 million millionaires, report says”). The story, by Associated Press Writer Candice Choi, is based on a report issued by Merrill Lynch & Co. and consulting firm Capgemini Group. It also reports that one third of the millionaires are located in the United States.
I will suspend my skepticism at anyone’s ability to overcome differences around the world related to, among other factors, differences in currency, property valuations and customs of confidentiality to derive an accurate number. The exact number, after all, is not that important. We like milestones so let's consider the number to be 10 million.
Whatever the exact number, a lot of people are millionaires and multi-millionaires without realizing it. We can credit the growth of IRA’s, 401(k)’s, 403(b)’s, and even life insurance (and allowing for the current dip) home values.
But, the HartfordBusiness.com story also reports that a million dollars isn’t what it used to be. Today, millionaires can be people of fairly modest means.
This story drew our attention because we interpret our "business litigation" mandate broadly. We include in our commentary issues related to estate planning, in particular, avoiding litigation among beneficiaries and the unpleasant surprises associated with unexpected estate tax liabilities and disputes with tax authorities.
We counsel clients to think about and make plans for their entire estate. Pension assets (which include IRA’s, 401(k)’s, 403(b)’s), the proceeds of life insurance and any jointly owned assets (such as homes, bank accounts, securities) do not necessarily pass by will but by separate beneficiary designations or operation of law. In legal terminology, these are “nonprobate assets.” Writing a will without also carefully coordinating the separate beneficiary designations, for example, may lead to unpredictable distributions of assets and the potential for disputes and litigation among the beneficiaries.
On the other hand, nonprobate assets are included in considering whether an estate becomes taxable and could put a modest estate over the top to a taxable level. We counsel clients to be aware of the way asset values may have grown over time and to do the appropriate planning.
For more on this subject, we invite you to view an earlier post, with link to our video program, My Financial Journal.
