Our industry loves its buzzwords, and the term "financial quarterback" is a well-worn staple of advisor marketing campaigns. But if your business prides itself on coordinated, team-based wealth management, the next few weeks of tax change uncertainty are your chance to back up your advertising with action.
The proposals making their way through Congress depend on agreements with the Democrats, who hold knife-edge majorities in both houses. Lawmakers have kicked the can for months, but may feel rising pressure from their constituents to get a win on the board before the midterm elections occupy their attention.
If and when these high-stakes bills become law, it likely will after a flurry of last-minute concessions and dealmaking. With the facts changing so quickly, these changes could have major tax implications for some of your clients.
Or not. Negotiations may fizzle, or major changes may be trimmed from the final bill to ensure its passage. Until we know for sure, investors are either taking a wait-and-see approach or they're scrambling to act before something might happen.
That means advisors and the professionals they work with need to be ready for anything. And it means they're probably going to face a huge time crunch as the holidays approach.
Many financial advisors, accountants and attorneys recall working long hours in late 2012, when investors rushed to make large gifts in the fear that the then-$5.12 million estate and gift tax exemption would be reduced to $1 million in 2013.
Given the uncertainty, many investors waited until the last minute before deciding to make gifts. It is human nature to take a wait-and-see approach, especially in times of uncertainty.
Prepare for the Rush
Consider the most recent House proposal to reduce the estate and gift tax exemption from $11.7 million per individual to approximately $6 million. Worse, grantor trusts would be largely eliminated as an estate planning tool under the House proposal, effective on the date of enactment.
Not all of your clients will be affected by these changes, but don't be surprised if your schedule fills with people who want to rush through grantor trust applications.
