A Prediction about Estate Planning in the Near Term

As trusted advisors, we see it as our job to alert you to strategies that can help build and protect your family’s wealth and the lifestyle it supports.  From a macro perspective, we see an estate tax that takes essentially no wealth from the vast majority of families, historically high federal deficits, and a real possibility for an administration change that would take us in the direction of more assets being lost to estate and gift taxes. 
 
An important and impactful estate tax minimization strategy has always been to use your exemption sooner rather than later.  Even if the exemption amount stays constant, using it earlier in your life means that you not only get that fixed dollar of wealth moved to the next generation without estate and gift tax, but you also move free of such tax all future appreciation on it.  With the magic of compounding, this can be extremely powerful.  Of course, if some of your current available exemption evaporates through legislation, say next year, then the failure to use it has that much more profound of an effect on your family’s wealth. 
 
Part of our prediction is based on what we mean when we say “use your exemption.”  Essentially, it means to transfer wealth in a manner that will cause it to not be part of your taxable asset base when you pass away.  Many clients will ask the natural question: Can I transfer it and still have access to the wealth if it turns out I need it for myself?  Yes.  There are a lot of strategies to do this, at least to some extent, and at least indirectly. 
 
So our prediction is this:  You could see a lot of interest in Trusts and similar strategies this Fall of 2020 to help clients “use the [currently generous] exemption” before a possible rollback beginning in the next 12 months.

*Intended as general guidance only and not as legal advice.