Is Estate Planning Dead?

No, really!! That was the front page headline on and industry publication I get called Insurancenewsnet Magazine. Without even opening up the magazine I know where the rant is headed.

Never in the history of estate planning has there been more opportunity to be as creative and accomplish as much. Articles are popping up left and right talking about 2011 and 2012, the two year window of opportunity signed into law by President Obama in December. While most of the world was focused on income tax and unemployment insurance, estate tax, estate tax exemption, gift tax exemption and generation skipping tax quietly stole the show.

Probably the most talked about part of this group is the increase in the gift tax exemption from $1,000,000 to a $5,000,000 lifetime exemption. Most of the articles and blog posts I’ve seen have focused simply on the fact that there is a huge opportunity to give money away in the form of large gifts. In the header of a Wall Street Journal Article was this statement, “Congress has set sweet new terms for the gift tax, and families are tearing up their estate plans to take advantage. Here’s what you need to know”.

Is estate planning dead? I believe there will be more movement in estate planning in the next 2 years than there has been in the last 10 and the last 10 years have arguably been the most active decade ever in estate planning. For those who look at estate retention and estate growth equally, the next three to six months should be the busiest period out of that two years. The driving reason for that is the fact that the most cost effective, fully guaranteed permanent life insurance product, the no lapse guarantee UL, will be increasing rates industry wide. It will be increasing them most right in the sweet spot of the new law, the $5 million dollar exemption ($10 million per married couple) that allows huge single premium policies to be purchased and held out of the estate through Irrevocable Life Insurance Trusts.

Life insurance rate increases are never advertised. The reason is that rate go up because the deals are too good for the company to make the profit margin they want. If you advertise that the best deal in permanent life insurance EVER is going away soon, well, would you wait for the price to go up? Thanks to social media we don’t have to depend on life insurance companies to let you know what’s coming. Just a thought. If life insurance companies are leaving a bit of their rear behind because their products are under priced, those that own those policies before the rates go up will own the best deal in the history of permanent life insurance. Kind of a nice position to be in I think.

Bottom line. Congress has opened a door and said they’ll keep it open for two years. With over 5 million households with net worth above $2 million, rather than wait and see what Congress does in two years, it’s time take action to protect and grow your overall wealth.