Financial Briefs

More Articles  Printer Friendly Version

 

Private Wealth's Perfect Storm

4801 1 

(Wednesday, August 18, 2020; 7:30 PM EST) Amid the Covid pandemic, changes in tax, financial, and economic arenas have created a deluge of added complexity  for advisors managing private wealth. Here's an overview of the abrupt change in conditions now battering private wealth, which, when taken together, amounts to a "perfect storm:"

Tax Policy. Budget shortfalls across the states as well as at the federal level are expected to result in steep hikes to state and federal income and transfer taxes.

Taxable Estates. For individuals with taxable estates, the current exemption of $11.58 million from estate and gift tax will be cut in half January 1, 2026. However, the exemption amount could be cut much sooner, depending on the outcome of the November 3 election. Changes in tax policy increase  the downside risks of failing to plan. While 2026 may sound a long way off, preparing now to maximize annual gift-tax exclusions, charitable donations, and appropriately tailored  trusts to accomplish your goals can ensure a lasting legacy.

Lowest Rates In Decades. Every month the IRS releases the minimum  interest rates you are permitted  to charge on  loans to family members, trusts and other related entities. With this  "applicable federal rate" currently at less than 1%, loaning assets may be a savvy way to transfer wealth to the next generation for buying a home, starting a business, or making charitable bequests.  The loans are sometimes part of a plan to transfer a family business, or support children with special  needs. With the pandemic potentially lowering the value of real estate and business assets, and causing frequent stock market volatility, optimizing low interest rates to make intrafamily loans is suddenly a more viable solution to reducing taxes and enhancing legacy planning. 

Liability Explosion. With tenants more often unable to pay rent, and small businesses facing financial difficulty, landlords and business owners are suddenly facing an explosion in their liability exposure. Asset protection strategies to mitigate personal liability exposure in the event of a setback requires preparation before a problem arises or facing a legal challenge. 

The Covid pandemic abruptly changed tax and financial conditions affecting estate tax and asset protection drastically, and this perfect storm requires proactive engagement of family members as well as advice from tax, legal and financial professionals. Please contact us with questions about your personal situation. 


Email this article to a friend


Index
Here's What's Happening Now In Wealth Management
Making A Financial Transition? Answer These Five Questions
Going Out On Your Own Terms: Six Key Documents In An Estate Plan
Your Financial Psychology Under Current Conditions
Do The Top 1% In Income Pay Enough Income Tax?
What's The Risk Of A Market Melt-Up?
U.S. Stocks Returned 10 Times More Than Bonds In Past Five Years
Stock Market Trend Report
Two Observations That May Make Higher Taxes Easier To Bear
John Oliver's Economic Analysis Is No Joke
Are You A Risk To Your Financial Health?
News Analysis: Today’s Testimony By The Fed Chair And Treasury Secretary
Pandemic Financial Pain Is A Thing
Capitalizing On Current Financial Economic Trends
The Cost Of Not Having A Financial Plan Is Surging
Equity Risk Premium Grew Wider And More Important

This article was written by a professional financial journalist for Blattel & Associates and is not intended as legal or investment advice.

©2021 Advisor Products Inc. All Rights Reserved.

The articles and opinions on this site are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your advisor with regard to your individual situation.
All summaries/prices/quotes/statistics presented here have been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. Past performance is no guarantee of future results.
When you access certain links on the Blattel & Associates website you may leave this website. We do not endorse the content of such websites nor the products, services or other items offered through such websites. Any links to other sites are not intended as referrals or endorsements, but are merely provided to the users of the Blattel & Associates website for convenience and informational purposes.
Robert Blattel is a CERTIFIED FINANCIAL PLANNERTM practitioner. The partners of Blattel & Associates are not registered in all states. Please contact us to verify availability in your state. This is not an offer to buy or sell any security.
CFP® and CERTIFIED FINANCIAL PLANNERTM are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.
Securities and Investment Advisory Services offered through Cutter & Company Brokerage, Inc., 15415 Clayton Road, Ballwin, Missouri 63011 * (636) 537-8770. Member FINRA/SIPC.
Privacy Policy can be read at http://www.cutterco.com/privacypolicy.htm.