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The $100,000 MistakeMarch 27, 2021

I get calls every week from investors wanting to know the best place to invest money. It’s a reasonable question, but I often find that the investor is focused on the wrong part of his or her financial situation. Does it really matter if an investor can get a 12% return if the plan gets ignored and the Government gets an unnecessary $100,000 in taxes? Wouldn’t it make more sense for an investor to focus on the best way to save that $100,000 than to focus on how to invest $50,000 to earn another $3,000 per year? The answer is obvious, but it’s often not what happens. Why? Most investors incorrectly believe that estate planning is about giving money away and losing control of their assets.

If you listen to many professionals, it sounds like estate planning is about relinquishing control of your assets. In fact, estate planning is about maintaining control of your assets. If you don’t like how the Government spends your money, estate planning will redirect how your money is spent, based on your desires.

Therefore, estate planning is about taking maximum control of your money and directing it the way you desire, not the way the Government or another other family member desires. Investors also fail to do estate planning because of just plain ignorance or gaps in their knowledge. Some investors still think that if they have a trust, they’ll pay no estate taxes. This is a widely held misconception. Other investors hate talking about estate planning because they’ll have to confront mortality. And as mentioned before, some investors think that estate planning means giving money away.

In fact, good estate planning starts with making sure you have ample resources for yourself. Only when that is ascertained can estate planning begin. Estate planning boils down to one simple issue–do you want to have control of your money?

How do you start? Completing a questionnaire (most lawyers and retirement and estate planning professionals use one when completing a will) will help you focus on your goals, assets, and desires. The questionnaire is followed up with an interview to help translate the answers into specific desires. Then you can work on determining ways to achieve what you want to have happen. This avoids the mistake that many make–jumping right into the tools (trusts, gifting, insurance) only to learn later that the tools don’t work as desired.

If you really want to make a big difference in your financial picture, it may make more sense to focus on estate planning than on how to get a higher percentage on your investments.

Go for it now. The future is promised to no one.
– Wayne Dyer