Estate plans aren’t just for the wealthy

| John Tetzloff | September 12, 2013 | 0 Comments

Estate planningWhen people think of an “estate plan,” the common misconception is to think big houses and nice cars. What surprises most people is that it doesn’t matter if you’re scraping by paycheck to paycheck or running a thriving family business, we all have an “estate.”

The question you have to ask yourself is: Do you want to decide how those assets are distributed when you’re gone? Or, do you want to let someone who has never met you make those decisions?

I’ve been helping people understand and pass down their assets for more than 20 years now, through my work with Catholic United Financial, over the air with my show on Relevant Radio and in print in my regular column in Our Catholic Journey magazine.

Estate plans aren’t just for the wealthy. It’s even more important for people of average means to protect their estates from unnecessary taxation and family drama. The less you have, the more important it is to make sure it ends up with the people and causes you love the most. There also is the issue of providing for yourself in the interval between leaving the workforce and leaving this earth.

The overall picture

When I meet with a client, one of the first things we discuss are the different types of assets that the person has, the tax rules of each asset, and how these assets will ultimately pass to his or her loved ones upon death.

Ask yourself: What assets do I have in my estate? This may seem simple, but many people don’t have a good understanding of the makeup of their estate assets. For that matter, many people haven’t taken the time to get a “big picture” view of their estate to fully realize what they have and the effect each asset has in their planning.

The first things you probably think of are your savings and checking accounts. These are considered liquid assets. They’re very useful in the short term, but if you tend to hold money in liquid form, you ought to consider a longer-term solution that pays a better interest rate.

The other thing immediately associated with estates is property. This includes real estate, of course, but also covers stocks and mutual funds.

When you make your plan, you need to consider the “risk vs. reward” of holding these types of assets. The tax implications of inheriting large acreages of arable land can drive grieving families from generational farmsteads. But there are several ways laid out by the government for people to avoid this situation.

Then there are retirement accounts like IRAs, Roth IRAs, pensions and 401(k)s. Each of these help to provide income in retirement, but the way they handle taxes now and when they distribute is very different. It’s extremely important to balance taxed and non-taxed assets when planning your retirement.

Other assets

Finally, there are annuities and life insurance contracts. They make up a special class of assets that can provide for both retirement and estate planning needs. They are inheritable by your heirs, so they provide for the next generation, but they can also provide income in retirement. Not only can annuities pay out a steady income, they also typically have higher interest rates than bank products, and can be inherited by your heirs.

Life insurance can also be a vital piece of a person’s asset mix. We know that life insurance provides the protection for our loved ones by replacing lost income, paying debts (including estate taxes) and maintaining a family’s lifestyle when a death occurs. But there are also many living benefits to life insurance. Tax-advantaged cash values, potential dividends and long-term-care/accelerated benefits can make a huge difference in the way we plan and live out our retirements.

One of the most valuable services a financial partner like Catholic United Financial can provide is a comprehensive overview of a person’s estate to help them create a plan that will provide for themselves and their family. In other words, we can help that person understand “what they’ve got” and how it all fits together for a prosperous future.

Tetzloff is the advanced case specialist and trainer at Catholic United Financial. He leads free estate planning seminars throughout the year and is the host of the show “Creating Wealth Beyond Money” on Relevant Radio. Follow him on Twitter @CWBMradio, or email him at

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Category: From Age to Age