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Estate planning is more than just tax avoidance

New York residents may not know that, according to the CNBC Millionaire Survey, 38 percent of Americans with assets of more than $1 million have not taken any steps to protect their estate. However, 68 percent of those with more than $5 million in assets have said that they have talked to an financial planner. In addition, Republicans were more likely than Democrats to talk to financial planners by a margin of 68 to 61 percent.

One reason why those with a large net worth may not have begun to take steps to plan their estate has to do with what one financial adviser has called "estate planning fatigue". The constant change in the federal estate tax exemption for several years necessitated the corresponding updating of plan documents. As the estate tax exemption now stands at $5.43 million, this type of tax planning is no longer an issue for most families, although many states impose their own estate taxes that take effect at a far lower threshold.

Another reason why some may not have begun the process is that they believe it is only worthwhile as a means to reduce their tax burden. Many don't realize that a comprehensive estate plan can also allow individuals to make end-of-life decisions and appoint guardians for minor children. Without clear instructions put into writing, it may be difficult for family members to determine what an individual would want in the event of incapacity.

Individuals may wish to discuss these matters with an estate planning attorney regardless of how old they are or how much they are worth. Such a plan may enable them to appoint suitable guardians for their children as well as prepare powers of attorney that would allow a trusted individual to make medical or financial decisions on behalf of the principal if necessary.

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