DEATH STILL A CERTAINTY
“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” (Benjamin Franklin, November 13, 1789)
Well Ben, less than 5 months after you penned this somewhat sardonic, definitive summation of life’s absolutes, you passed away. Therefore, you would have had no way of knowing just how popular this maxim was to become and how oft quoted it would be. I don’t know how many phrases written in letters over 220 years ago have been translated into languages spoken across the globe and continue to pop up in daily use in the new millennium, but your adage highlighting two of humankind’s most dreaded inevitabilities certainly is one.
And Ben, although you lamented the “infancy of science” in your day and envisioned a future day when greatly advanced scientists would be able to "preserve the dead for later revival," this has not come to pass…as of yet. Alas my venerable friend, in 2010, death remains a certainty. But I want you to know that we have made great strides in medicine, especially over the past century. While you yourself lived a productive life of 84 years, the average guy in your generation lived only 57 years. In 2010, Americans are expected to live into their late 70’s on average , and it is no longer unusual for people to live well into their 90’s.
With so many of your most memorable maxims reflecting your fervent belief in the importance of prudent financial planning, (see end of this post) you of all people Ben, will understand the problems that increased life expectancy can pose for a financial/wealth planner such as myself. I wonder if you realize Ben, that my clients, who typically retire in their 60’s, can now look forward to 30 years or more in the non-income, leisure phase of their lives. You can surely understand the increased challenges financial advisors now face in ensuring that clients’ retirement assets will withstand inflation sufficiently to allow for the lifestyle they desire throughout their retirement years.
AND SOMETHINGS NEVER CHANGE, WHILE OTHER THINGS...
During your lifetime, Ben, you experienced the Great South Seas Company Investment Bubble of 1720, and a few decades prior to your birth , the infamous “Tulip Bulb Bubble” gripped Holland. I want you to know that overly speculative and irrational investing are still with us; bubbles and investment scandals occur regularly and continue to wreak havoc on financial markets and investors’ portfolios.
What has changed dramatically in terms of market cycles and behaviors, is that in our current technological age , we have ever new sophisticated agitators in the mix. Even you, a brilliant inventor and visionary, could never have envisioned what we call the “internet and 24/7 media coverage” and the impact they would have on the world as we know it and our global financial markets, specifically. This combination tends to get investors ever more nervous and as a result, to render thoughtful, rational financial planning that much more challenging.
There is no way I could adequately describe to you how modern technology and the internet have changed the lives of Americans. What is truly amazing is that in our globally connected , technology driven world, your maxims relating to financial prudence and planning are as relevant today as they were when you originally published them in your Poor Richard's Almanack. (see end of this piece to enjoy sample maxims)
IN 2010, DEATH BUT NO TAXES?
Ben, as you predicted, paying taxes is still a certainty in this country. However, given your famous sense of humor, I know you would get a big chuckle out of the current status of the U.S. estate tax. The U.S. first began taxing the transfer of wealth from generation to generation in 1797, pursuant to the Stamp Act , 7 years after your death. Over the next 100 years or so, estate taxes were used sporadically to finance wars. In 1916 they were instituted permanently, and they continued to be levied in one form or another through 2009.
But given a quirk that resulted from how our Executive branch and Congress govern these days, the estate tax expired at the end of 2009---but that’s just the beginning! The estate tax comes back in 2011 at a much higher rate than in 2009. That’s right, for one year only, an American family can escape the estate tax! Consequently, it is actually beneficial, from a purely estate preservation perspective, to croak in 2010. In fact, the recent death of one of our country’s wealthiest individuals, a Texas billionaire worth $9 billion, provided his family with a $4-5 billion tax savings bonanza.
While we were all sure that Congress was going to adjust this one year estate tax lapse before it took effect, Washington is so polarized these days, it actually was allowed to slide. And now in light of the death of the Texas billionaire, it is unlikely Congress will take on his family’s lawyers in an attempt to pass any corrective legislation retroactively. Ben , you would have enjoyed the quirky way in which what some have dubbed the “death tax” does, indeed, seem to be escapable this year and you surely would have come up with the perfect, wry maxim about passing on in 2010.
IN CONCLUSION MR. FRANKLIN
The truth of the matter is Ben, that we need you here now more than ever. Too many Americans in 2010 are suffering from a sort of a collective angst or malaise. They seem to have lost their senses of humor and their ability to calmly reflect on their lives. I wonder what it would be like to have you, Ben Franklin amongst us today. We could certainly use your ability to humorously crystallize the truths about American life and to help us all gain some perspective… And you see, you are known for your rare scientific and inventive genius, and there is this horrific oil leak out in the gulf that seems to defy solution and if you could just…………
MY FAVORITE BEN FRANKLIN FINANCIAL PLANNING MAXIMS:
A penny saved is a penny earned.
Beware of little expenses. A small leak will sink a great ship.
By failing to prepare, you are preparing to fail.
Creditors have better memories than debtors.
Distrust and caution are the parents of security.
He that can have patience can have what he will.
He that lives upon hope will die fasting.
Time is money.
When in doubt, don't.
AND WHO COULD FORGET THESE SOUTH FLORIDA FAVORITES?
Guests, like fish, begin to smell after three days.
I wake up every morning at nine and grab for the morning paper.
Then I look at the obituary page. If my name is not on it, I get up.
Austin A. Frye, MBA, JD, CFP®
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