Wednesday, July 26, 2017

Estate Planning for the New Millionaire Next Door


More than twenty years have passed since Tom Stanley and William Danko published their best-selling book The Millionaire Next Door, documenting how wealthy households tend to handle their personal finances, making the statement that wealth is not what you spend, but what you accumulate. In fact,” identifying the nuances of wealth accumulation at the household level has been the subject of research and discussion for nearly 100 years,” researchers Kruger, Grable, and Fallaw write in the Journal of Financial Planning.
At Geyer Law, our work often involves the protection and the passing on of wealth. We are always interested in reading materials about wealth accumulation – and about what makes wealth accumulators tick.
The study results reported in the Journal showed that, “overall, affluent households generally reported more frequently taking financial risk in their investment portfolios.” At the same time, the affluent were more likely to understand the nature of the risk in a particular investment and the likelihood of risk and return, and were more discerning about the appropriate level of risk to take for their own investment portfolios.

Interestingly, just two years ago, the CNBC Millionaire Survey came to a totally different conclusion, reporting that “more than one-third of high-net-worth families have not taken the most basic steps to protect and provide for their loved ones when they die.” (True, the researchers found, individuals with a $5 million or greater net worth or greater were more likely to have done planning.) One possible explanation offered for the general lack of estate planning preparedness is the higher federal estate tax exemption amount; $5.49 million for 2017.

But, whether you qualify for the “affluent household” category or not, life’s journey is fraught with change, and estate planning is about a lot more than estate tax avoidance. Life’s changes, including marriage, children, business, retirement, incapacity and death all require careful planning to protect the people most important to you and whatever level of assets you’ve worked for– and taken risks to achieve!



- by Rebecca W. Geyer

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