Estate Planning: A Priceless Step Toward Preserving Wealth

Claritas in the News

Reprinted from San Diego Business Journal
July 30, 2007
Pat Broderick

So many millions, so many choices, so little time.

How are 21st century rich folks minding the mint? If they’re wise, they are tending to their estates on a regular – and timely – basis, and keeping up with both new options in the marketplace, as well as the ever-shifting tax laws.

That’s the consensus of some San Diego-area estate planners, who have accumulated a fair number of cautionary tales. Consider these gems:

There once was a very rich fellow, who also was a very private fellow, especially about his business affairs. But, after his death, his estate ended up in probate, leaving his considerable assets wide open for everyone to see.

“He had had some very sophisticated estate planning done, and had his will and trust in place,” said Jacqueline Parks, an associate with San Diego-based law firm Best, Best & Krieger, and a specialist in estate planning. “But he failed to transfer his assets to the trust, which keeps them out of probate – a very public, very open process. It’s public record.”

Some estate planning attorneys in the Ohio town where Parks used to work joked that the gentleman must be rolling over in his grave.

“Newspapers could have printed all of his assets in the newspaper if they had wanted to,” said Parks. “He had a really good business attorney, but didn’t have an estate planning attorney. People have advisors they know and trust with their business, and they ask, ’Will you do my will for me?’ A lot of attorneys get asked that, right out of law school.”

Louis A. Mezzullo, a partner in the Rancho Santa Fe office of Luce, Forward, Hamilton & Scripps LLP, and a nationally recognized estate planning attorney, and immediate past chair of the American College of Tax Counsel in Washington, D.C., has seen his share of missed opportunities, too.

“I have had several situations where a client procrastinated and it cost the family money,” he said.

One client had two marriages, and had named his daughter by the first marriage as executor. But, the client died before he signed the will. The daughter went to the courthouse, and so did the second wife, and the court appointed both as co-executors.

“I’m not sure if the estate has ever been settled,” said Mezzullo.

In another case, an entrepreneur planned to divide his business between his son and son-in-law. But, before he could put the plan in place, he arrived at work only to be shot by a burglar. The son and son-in-law couldn’t agree on terms, so the business was sold for half of what it was worth.

“It’s never too soon to start planning,” said Mezzullo, who also is past chairman of the American Bar Association Section of Real Property, Probate and Trust Law.

Chris Meacham, chief executive officer of Rancho Bernardo-based Cornerstone Wealth Management LLC, frets over wealthy clients who won’t take the time to tend to their estates.

“We have some we can’t get to come in and spend a couple of hours to go over their affairs, because they are working so hard running their businesses,” said Meacham. “I say, ’Isn’t this part of what you’re working for?’ This is the most frustrating thing I run into with clients. They’re probably the same people who aren’t seeing their doctors.”

Carol Schaner, a certified tax specialist with the law firm of Gordon & Rees LLP in San Diego, takes to tasks clients who view estate planning more as a one-time transaction, rather than a process that needs to be adjusted as time passes.

“Not everybody is well-positioned to serve as an executor, and there are people who shouldn’t be named into those positions,” said Schaner. “Situations change.”

World of Wealth

What doesn’t seem to change is that the rich keep getting richer. In 2006, there were more than 37,700 households in San Diego County worth more than $1 million, a 1.8 percent rise from 2005, and these households are expected to grow by more than 51 percent in the next five years, according to Claritas Inc., a San Diego-based market research firm.

In North America, high-net worth individuals – with at least $1 million in assets – rose by 10 percent in 2006, with combined assets totaling $11.3 trillion; while globally, high-net worth individuals rose 8.3 percent. This, according to the 2007 World Wealth Report, released in June by New York-based Merrill Lynch & Co. Inc. and Capgemini, an international consulting, technology and outsourcing services company.

The growth was spurred by a strong global economy, according to the report, including strong corporate profits, declining oil prices in the second half of the year, and increased investor and consumer confidence.

“Real estate did play a partial role for this group of people,” said Ajay Gupta, vice president, and wealth management advisor for the Merrill Lynch Global Private Client Group in downtown San Diego.

They also took a global perspective to hedge their bets.

“With the weakening of the U.S. dollar, they benefited from having assets spread across the globe,” he said. “More and more investors, even those sitting on large cash balances, also include non-U.S. dollars – short-term investments – with euros, yen, Canadian dollars. They don’t want to lose purchasing power on a global level.”

Gupta described San Diego as a “very diversified market,” compared to some other regions.

“In Texas, you have oil or energy,” he said. “But, in San Diego, there are a lot of local entrepreneurs, who own businesses that have done well.”

About Claritas

Since 1971, San Diego-based Claritas has been the pre-eminent source of accurate, up-to-date marketing information about people, households and businesses within any geographic area in the United States. Its target marketing services are aimed at reducing the cost of customer acquisition and growing customer value. Claritas offers industry-leading consumer segmentation systems, consulting services and software applications for site analysis, advertising sales and customer targeting. Claritas is a Nielsen company. The Nielsen Company is a world-leading information and media company that includes ACNielsen, Nielsen Media Research, Spectra Marketing Systems, and Scarborough Research, among others. To learn more about Claritas and Nielsen products and services visit their web sites at www.claritas.com and www.nielsen.com.