Editor's note: This is Part 3 in a three-part series about "Learning from Michael Jackson." To read parts 1 and 2, visit www.lifeinsuranceselling.com
If you met Michael Jackson before he died, what would you have talked about?
Maybe you would have had a conversation about music or dancing or how you appreciated his talent. But how would you have bridged the conversation quickly to help him with his estate planning? My conversation with him would be something like the one below.
Social capital
May I ask you a question? What plans have you made for the distribution of your social capital? You know what I mean: The part of your estate that you can’t keep, that by default goes to the IRS in the form of taxes. Everyone has a plan either by design or by default. Why not create an inspirational plan that is designed to help you give your social capital away to the charities of your choice rather than to the IRS by default?
Of course, you and I both know that plans can be made to pay more to the IRS, if you would prefer. The late Chief Justice Judge Learned Hand said, “No one owes a patriotic duty to pay more than the law demands.” So why not design a plan to pay the IRS what you owe and not a penny more? Who would manage your money better; your favorite charity or the IRS? Why not design a plan to “help you keep together what you’ve worked so hard to put together?” (to borrow a line from Ben Feldman.) Would you pass your hard-earned money to your heirs and not to the IRS, if there was a legal and ethical way to do it?
Let me make this easy for us. I don’t know enough about your unique situation to know whether the very special way we help our clients would work for you or not. But I figure it would only take a few minutes to find out. What do you think? (This is a tactic from nationally known sales trainer Doug Carter.)
Involuntary philanthropy
IRS.gov Publication 950 explains estate taxes. The top marginal tax rate for estates in 2009 is 45%. Estate taxes have been called a form of “involuntary philanthropy.”
Be informed
In America, there are two types of plans: A plan for the informed and a plan for the uninformed. The plan for the uninformed may cost much more. Our firm would be happy to explore ways to help you accomplish your goals for the reasons that are important to you.
Tax deductions are offered to charities as a way to transfer some of the social responsibility from the government to the private sector. Why not design a plan to help you live your life on purpose through helping others live a better life? Why not become a voluntary philanthropist and direct your social capital to the charities of your choice rather than to the IRS by default?
With Michael Jackson’s taxable estate estimated to be between $100 million and $200 million, do you think that his advisors helped him self-direct $50 million to $100 million to his family foundation as opposed to the IRS by default?
Resources for agents
Visit Web sites such as: www.MDRT.org, www.charitabletrust.com, www.legacyboston.com and www.foundationsource.com. Google charitable strategies such as “Charitable Remainder Annuity Trusts” (CRATs), “Charitable Remainder Unit Trusts” (CRUTs), “Charitable Lead Trusts” (CLTs) and “Family Foundations” (private, support organizations and donor-advised funds). Life insurance can be used to replace wealth given away to charities, to leverage charitable gifts and to pay estate taxes.
Brent Welch, CFP, ChFC, CLU, started as a financial planner in 1984 and is founder and managing member of Welshire Capital, LLC, a firm specializing in private wealth management, retirement and estate planning. He is a past president of The International Forum, a past board member for the AALU, a 17-year MDRT member and an 8-year TOT member. You can reach him through his Web site at www.welshirecapital.com.