When clients ask Yale Levey to forecast how the tax code might change next year, his answer is invariably the same: “I have absolutely no idea"
When clients ask Yale Levey to forecast how the tax code might change next year, his answer is invariably the same: “I have absolutely no idea.”
At which point, the founder and managing principal of Next Generation Wealth Planning LLC usually asks a question of his own: “Are you really sure you need to care what Congress decides to do with taxes?”
The surprised pause that usually ensues provides the opportunity Mr. Levey needs to open up the conversation to one of his real passions.
“It doesn't matter what Congress does or doesn't do,” he explains. “Through skilled planning, you can often institute tactics that can help you to eliminate significant amounts of tax, and even potentially all of your federal estate tax liability, regardless of future exemption amounts or the size of your estate.”
Mr. Levey then poses another question: “How did Ted Turner sell millions of dollars of AOL stock without paying any upfront capital gains taxes?”
“The answer,” Mr. Levey says, “is through charitable-tax-planning incentives.”
As a chartered adviser in philanthropy as well as a certified financial planner, Mr. Levey admits to a bias toward clients with charitable inclinations.
“I like working with people who want to give back and who view return on investment as something more than just a growing balance sheet,” he said. “My perspective is that your wealth is multidimensional — not just your money but your personal, intellectual and social wealth.”
That said, he is first and foremost a financial adviser, albeit one who has “an understanding that I can help people use existing tax incentive and tax avoidance opportunities to leverage their financial wealth, while supporting the people, causes and institutions about which they care most deeply,” he said. “Through creative planning that includes charity, there are financial and non-financial wealth benefits [for] your clients.”
By including charitable-planning tools — such as charitable remainder trusts, charitable-lead trusts, charitable-gift annuities and donor-advised funds — from among the numerous tactics available to us, “we can help our clients avoid upfront current capital gains exposure when selling appreciated assets, potentially increase current income for lifestyle and even potentially increase an heir's inheritance,” Mr. Levey said.
He cites research by George Cooper, a Columbia University law professor who studied the efficacy of the estate tax system for The Brookings Institution. When he looked at mega-wealthy families such as the Du Ponts, Mr. Cooper found that on average, even subsequent generations paid only about 5% in estate taxes — even during a period when estate taxes were about 77%.
“The professor concluded that there were really only two reasons to pay the estate tax, the first being taxpayer indifference and the other, poor planning advice,” Mr. Levey said.
