The physiology of a human being is extraordinarily complex.  Our brains work in ways that, at times, we may not even understand ourselves.  As we learn, we constantly question what we are hearing and being taught.  If it seems accurate we accept it, or we reject it if we have any doubt.  Many times, people have doubt because they just simply cannot fathom the logic and the truth behind it.  New situations are often doubted because they have never been experienced, while old situations are also doubted because people believe in exceptions and change.

These scenarios occur in our daily lives on a regular basis.  It’s as common as this.  Your credit card bills are due every month at the end of the month.  You’ve been paying your bills on time for years now, but this year you’re a little behind and figure you’ll get to it eventually.  You think to yourself, "Maybe my credit card company will be lax with me and waive my late fee. I heard that they did that for Bob’s uncle’s friend’s nephew".

But, of course, they do not make an exception for you, and you are penalized with some hefty fees. You think to yourself, "If I just paid my bill on time, I wouldn’t have to pay this ridiculous penalty fee"

So why didn’t you pay on time?  Oh right, you kept putting them off and thought that maybe your credit card company would be lenient with you.  But seriously, who wants to spend more money if they don’t have to?  You knew that the consequences of not paying on time would be additional fees, but instead you chose to hope you would be an exception to this.

In 2013, you can expect income taxes and capital gain rates to rise.  It’s the end of Bush era tax cuts.  You are probably reading this and nodding your head since you’ve already heard it all, but what have you done about it?  Many Americans acknowledge the situation, but have taken no action to protect themselves.  They either believe that the government won’t actually enforce the new laws, or that the there is nothing they can do about it.

Just the other day, I went to lunch with a long time friend and gold bug.   He’s got some serious net worth so will definitely be affected by the tax increases, especially the estate tax when the exemption goes from $5M to $1M and the rate jumps to 55% on anything over $1M   His heirs are going to pay a lot more tax.  When I asked him if he’s moved his full exemption into a trust, $5M for him and $5M for his wife totaling $10M, he had not and was not planning to do so.  His heirs will pay $4M in estate taxes versus zero if he made the transfer this year.

I’m not sure I had a poker face on that one.  I simply could not believe it.  I asked him why and his response was reasoned, but in my mind also flawed.  He thought there would be some compromise politically and that the exemption would climb back up to protect the small business and family farm.  OK, if it happens, but right now today, he has the exemption.  He can step off the tracks and not hope that the train gets sidelined at the junction in front of him.

For me it’s like the worst gambling odds ever.  Heads the government wins, tails you lose.   He’s willing to gamble $4M with no upside.  Al he has to do is step off the tracks and his heirs keep the $4M.  If not, it’s at risk and he has nothing to gain by taking this risk.   He can only lose.

Well, we let the conversation go at this point.  He’s a free actor and can obviously do with his money whatever he wants. I personally just like those odds and hope that you don’t either.

In real life we see examples of the little guy getting screwed all the time.  For example, look at the folks in Argentina. Since the 1930s, their county has been teetering with economic and political success.  During these years, Argentina has suffered through more economic crises than most countries, causing default of their country’s foreign debt, a high rise in unemployment, and the use of alternative currencies.  The uber-rich have their money in Uruguay, Switzerland and now Panama.  It’s the generally wealthy and middle-class Argentineans who lose their savings.

However, instead of learning from prior economic downfalls, most citizens do not make any changes to protect their assets.  Instead, they let whatever happens, happen.  By this time, they have already fallen and the most that they can do is hope that they will make it through.

Don’t let this be you.  When you see a storm coming, you head for high ground and you look for shelter before it downpours on you.  When you see a train headed in your direction, you get off the tracks before it runs you over.  When you see a huge rise in taxes, you act on your legal right to transfer your wealth into a trust so that your heirs aren’t forced to hand it over to the government.

It just makes sense.  Folks, we can’t avoid the future and denying it sure won’t help either.  Dates for implementation of the new laws have already been set, December 31, 2012.  And the longer you spend denying the future, or hoping for the government to change their minds, the more you will lose.  You might as well flush your cash down the toilet… I’m sure you’ll get more satisfaction from doing that than handing your cash over to taxes.

Get off the tracks now and don’t become a victim of denial and procrastination.  Instead, spend the remaining weeks of 2012 doing what you can to protect your wealth.  Go confidently into 2013 knowing that your assets are secure for your heirs to preserve and enjoy.