Category Archives: Financial Planning

NY Times – “How the Wealthy Are Trying to Anticipate Biden’s Tax Increase”

“Financial advisers say they have been flooded with calls from clients who are trying to predict which of President Biden’s tax proposals will become law….I don’t know where we’re going with any of these taxes,” said Bill Schwartz, managing director of Wealthspire Advisors, which advises clients with $5 million to $20 million in assets. “But I do know it’s really difficult right now to justify what people call a loophole or what I call using the tax code to your advantage. In fact, it’s really hard to justify any of these techniques for the affluent right now, not that I think they’re right or wrong.”

To read the full article, click here.

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“What Jeffrey Epstein Did to Earn $158 Million From Leon Black?”

A very interesting article in today’s NY Times Business Section. Estate planners will be surprised at the issues discussed.

“The answer: help rich people pay less in taxes. In the case of Mr. Black, the chief executive of Apollo Global Management, his advice could have been worth as much as $2 billion in savings, according to a law firm’s review of Mr. Black’s business dealings with Mr. Epstein….Mr. Epstein’s specialty was suggesting ways for wealthy clients to use sophisticated trusts and other investment vehicles to reduce their tax liability while passing on assets to their children, according to documents reviewed by The New York Times and interviews with 11 people familiar with his work. In the process, he collected hefty fees — usually based on a cut of the anticipated tax savings….In Mr. Black’s case, according to the review by the law firm Dechert, the savings were enormous: about $1 billion for a single GRAT. Mr. Epstein’s detection of a problem in a trust set up in 2006 and his proposed solution were “the most valuable piece of work” that he performed, the report said. “Outside legal counsel described the solution as a ‘grand slam,’” according to the Dechert report, which was commissioned at Mr. Black’s request after The Times reported in October that he had paid Mr. Epstein at least $75 million in fees.”

To read the full article, click here.

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The Estate Tax May Change Under Biden Affecting Far More People

An interesting article in today’s NY Times authored by Paul Sullivan. He writes, “So the question for taxpayers now is: What happens once Mr. Biden can begin enacting changes in tax policy? The biggest long-term change involves the estate tax.” Sullivan goes on to discuss the possible loss of step-up in basis, “A Biden administration may move to change this for logical and revenue reasons. Imagine trying to determine the capital gains from AT&T stock that your grandmother bought in 1943 when record-keeping was done with a pencil and paper. Today, cost-basis information can be retrieved in seconds.” He goes on to discuss some of the inherent problems in this approach.

A different approach could be adjustment to current estate tax exemptions and rates. “With Democrats controlling the legislative and executive branches, there is concern that the exemption level could drop to $5 million or even $3.5 million…For the wealthiest in the country, the bigger concern is the rate itself. It’s now at 40%, but it was as high as 55% in 2001.”

To read the full article, click here.

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Defined Value Clauses: An Important Tool for Turbulent Times

WR marketplace

“As the 2020 presidential election approaches, uncertainty continues regarding the potential for tax legislation and changing market conditions, causing many to consider using current transfer tax exemptions with gifts before year-end. Individuals planning to transfer hard-to-value assets may wish to consider using a gift agreement with a defined value clause to shield against unwanted gift tax consequences.”

To read the full report, click here.

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Planning Ahead of the 2020 Election and Possible Changes to the Estate Tax and Valuation Discounts

Paul Sullivan (Wealth Matters) writes today in the New York Times, “What needs to be analyzed for affluent individuals are the potential changes no candidate is talking about: lowering exemptions and raising rates for the estate and gift taxes and ending the valuation discount for closely held family businesses, a tax break that allows families to transfer a valuable asset for less than it is worth.”

To read the full article, click here.

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AALU: Legacy Management: A Fresh Look at an Age-Old Business

While traditional estate plans may cost less, the value added with a comprehensive legacy management approach generally exceeds its marginally higher expense. Proactive management supported by a cooperative multi-disciplinary team helps families see what is on the horizon and efficiently navigate changes. Professional services rendered to implement and maintain a plan also eliminate many costly issues that routinely emerge when clients use a less sophisticated or “DIY” approach.

To read the full report, click here.

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Shifting Gears – Rising Rates and Legacy Planning

“Relatively small shifts in applicable interest rates can have a disproportionate effect on the performance of rate-sensitive legacy planning. Appreciating the potential economic impact of the rate changes and how other factors, such as payment structure, term selection, and asset valuation, also can complement overall performance, may help clients and advisors to better customize the planning to achieve the intended goals.”

To see the full report, click here.

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Protecting Your Charitable Deduction – The IRS Issues Final Guidance

“The IRS has issued long awaited guidance concerning the proper reporting of cash and noncash charitable contributions…Failure to comply strictly with these requirements can result in a denial for some or all of a claimed deduction.”

To read the full report, click here.

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“Trouble Ahead, Trouble Behind,” and You Know that Notion Never Crossed My Mind: Avoiding 5 Common Mistakes in Life Insurance Planning

“In a world of increasing commoditization, adding value is key. Advising on product selection and identifying common trouble spots in the development of a life insurance plan can offer advisors significant opportunities to provide value to their clients. Collaborating with other allied advisors early on in the client’s planning also can alleviate many of these problems without creating extensive delays to policy issuance.”

To see the full report, click here.

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Getting Everyone on the Same Page - Life Insurance Basics for the Allied Advisor

“The increased complexity and sophistication of life insurance products emphasize the importance of the advisor’s role in explaining the fundamental differences between life insurance products to the client.”

To read the full report, click here.

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