Planning Potpourri

■ “Live long and prosper” is
said after a Vulcan salute, but all you Tax Trekkies knew that! But did Spock
or Mrs. Spock actually first stay it? Estate planners typically represent the family
so that coordinated and better results can be achieved. But if women outlive
men on average by six years who should be calling the final shots? Is the
female living long but not prospering because the shorter lived male pushes
estate and gift planning? Perhaps dad is feeling more generous about gifts for
the grandkids ‘cause dad won’t be around to need the money, but mom might be
left trying to make ends meet. Six years is a long time. Just a thought.

■ Is 4% the Magic Number: Some folks test your ability to retire by
estimating 3-5% of your investable assets and then comparing it to your budget.
Not a bad rule of thumb for a preliminary chat before you crunch the real
numbers with your CPA or financial planner. But is that budget number really
right? Many magazines and financial gurus espouse that you should “need” say
75% of your pre retirement income to support your post-retirement lifestyle.
But according to a recent article in Investment Advisor magazine quoting
researcher Dan Ariely folks “want” a lifestyle that might require 130% of
pre-retirement salary. So it’s not only teenagers who confuse “need” and “want.”
But think about the implications to retirement planning! Think about the
implications of estate planning, especially gifts and other wealth transfers!
What numbers must remain for the female of the couple (+ 6 years) to have the
lifestyle she “wants” before gifts can be made? Are estate planners pushing
clients to make tax advantaged wealth transfers before reviewing stress tested numbers
with the client’s wealth manager? Are advisers reasonably assuring that their
client/parents have economic security first? The answer in too many cases is
negative. The reluctant planning client may be the prudent client. Just a
thought.

■ Trustees of Insurance Trusts: Watch your fiduciary back! If an insurance
policy will be replaced have an independent insurance consultant, in addition
to the broker, provide a written analysis confirming the advisability of the
change. Cochran v. Keybank, 901 NE2nd 1128 (Ind. App. 2009).

■Low Interest
Rates: Great for GRATs, lousy for CRATs. Charitable
Remainder Annuity Trusts don’t work well when interest rates are low because
the value of what the charity gets when the CRAT ends is low and the
requirement that the charity get 10% of the value of the property given to the
CRAT is tough to meet. A taxpayer recently missed the mark and the IRS
permitted the CRAT to be rescinded and the property returned to the taxpayer.
PLR 201040021. Sometimes “backsies” is allowed! But to get this result the taxpayer
had to obtain the consent of the charity, the trustee and the state’s attorney
general.