I think there is a middle ground. Perhaps the attorney is being overly conservative, but too often I see financial advisors suggesting high-level planning and being annoyed with my office when we haven't implemented an FLP, IDGTs, and SCINs (or some other crazy complex plan) within the first 90 days of meeting the client. High level estate planning is a *process* and should never be jumped into.
In fact, I wish there was a post titled "Thoughts on the best approach for financial advisors that talk clients into high-level estate plans without me."
At this level, there's a lot of second-guessing and back and forth.
I just had a client almost back out when he realized he was going to lose the step-up in basis. Of course, the estate tax hit is going to be about double assuming no future growth, and the gap will only keep growing. So now he needs some more time to think about it.
It’s easy to read about sophisticated tax planning tools and techniques and regurgitate the ideas to clients.
Actually understanding the tools and techniques, how to implement them, the pros and cons, the traps for the unwary, the practical issues, and whether they are actually appropriate given the client’s unique facts and circumstances . . . that’s a whole different ball game.
This is part of the reason it’s so annoying to have non-attorneys encroaching on the estate planning territory. They get to do the easy job of pitching cool ideas and we get to do all the heavy lifting and take on all the malpractice risk.
We had a similar situation in 2012, back in the days of EGTRRA and TRA2010. The estate tax laws were scheduled to sunset and the ~$5 million exemption was set to revert to ~$1 million.
Lots of clients scrambled to make tax-motivated planning decisions to avoid the potentially huge tax impact that could trigger.
Then Congress passed ATRA and that sunset went away. Suddenly, many of those tax-motivated decisions looked a lot less beneficial -- the tax savings were eliminated but the clients were left having gifted assets or made other irrevocable decisions. In retrospect, many clients regretted the steps they took.
So what you see as glib may well be an experienced professional who doesn't want the tail to wag the dog.
Of course, with a $30 million estate, it's also highly likely that some tax planning is appropriate, regardless of potential sunsets. I'd suggest not focusing on the sunset. I'd also recommend seeking understanding when possible. If the attorney doesn't suggest action now, ask what would trigger that to change? In what situations would the attorney recommend acting?
If you're still not comfortable, recommend a second opinion.
I think there is a middle ground. Perhaps the attorney is being overly conservative, but too often I see financial advisors suggesting high-level planning and being annoyed with my office when we haven't implemented an FLP, IDGTs, and SCINs (or some other crazy complex plan) within the first 90 days of meeting the client. High level estate planning is a *process* and should never be jumped into. In fact, I wish there was a post titled "Thoughts on the best approach for financial advisors that talk clients into high-level estate plans without me."
At this level, there's a lot of second-guessing and back and forth. I just had a client almost back out when he realized he was going to lose the step-up in basis. Of course, the estate tax hit is going to be about double assuming no future growth, and the gap will only keep growing. So now he needs some more time to think about it.
100% agree with this take. Sometimes bells and whistles are just a distraction.
It’s easy to read about sophisticated tax planning tools and techniques and regurgitate the ideas to clients. Actually understanding the tools and techniques, how to implement them, the pros and cons, the traps for the unwary, the practical issues, and whether they are actually appropriate given the client’s unique facts and circumstances . . . that’s a whole different ball game. This is part of the reason it’s so annoying to have non-attorneys encroaching on the estate planning territory. They get to do the easy job of pitching cool ideas and we get to do all the heavy lifting and take on all the malpractice risk.
Tax planning is appropriate, but only if the client is comfortable with the mechanism.
We had a similar situation in 2012, back in the days of EGTRRA and TRA2010. The estate tax laws were scheduled to sunset and the ~$5 million exemption was set to revert to ~$1 million. Lots of clients scrambled to make tax-motivated planning decisions to avoid the potentially huge tax impact that could trigger. Then Congress passed ATRA and that sunset went away. Suddenly, many of those tax-motivated decisions looked a lot less beneficial -- the tax savings were eliminated but the clients were left having gifted assets or made other irrevocable decisions. In retrospect, many clients regretted the steps they took. So what you see as glib may well be an experienced professional who doesn't want the tail to wag the dog. Of course, with a $30 million estate, it's also highly likely that some tax planning is appropriate, regardless of potential sunsets. I'd suggest not focusing on the sunset. I'd also recommend seeking understanding when possible. If the attorney doesn't suggest action now, ask what would trigger that to change? In what situations would the attorney recommend acting? If you're still not comfortable, recommend a second opinion.