The tightening presidential race between Vice President Kamala Harris and former President Donald Trump is driving an acceleration in estate planning among the ultra-wealthy, with tax advisors warning of potential changes to the estate tax exemption.
As reported by CNBC, concerns over rising taxes and the scheduled expiration of key provisions from the 2017 Tax Cuts and Jobs Act have sparked a wave of wealth transfers aimed at taking advantage of current tax benefits before they possibly expire at the end of 2025.
Currently, individuals can transfer up to $13.61 million, and couples can transfer up to $27.22 million to family members or beneficiaries without triggering estate or gift taxes. However, if the tax provisions expire, estates will be exposed to a much lower tripwire, owing a 40 percent transfer tax on assets above roughly $6 million to $7 million for individuals and $12 million to $14 million for couples.
The outcome of the presidential election could determine whether these provisions are extended or allowed to expire. Harris has advocated for higher taxes on individuals earning over $400,000, which includes support for increasing estate taxes. In contrast, Trump has indicated he would seek to maintain or even expand the current tax cuts if re-elected. With Harris and Trump now neck-and-neck in the polls, the likelihood of political gridlock has increased, raising the risk that no legislative action will be taken before the 2025 deadline.
“There is a little increased urgency now,” said Pam Lucina, chief fiduciary officer for Northern Trust, told CNBC. “Some people have been holding off until now.”
Wealth advisors interviewed by CNBC reported a wait-and-see approach among many affluent families, who were hoping for a Republican victory that could preserve the higher estate tax exemption. But with the race now too close to call, tax planners are seeing more urgency among clients to act before it's too late.
The decision on when and how much to transfer is far from straightforward. Many families are concerned about transferring assets prematurely, only to see the tax cuts extended. “Especially with families with younger children, a primary concern is having donors’ remorse,” Ann Bjerke, head of advanced planning at UBS, told the news outlet.
Mark Parthemer, chief wealth strategist at Glenmede, also highlighted the dangers of hyper-fixating on tax efficiency: “While it may be a once-in-a-lifetime opportunity as it relates to the exemption, it’s not the only thing. We want individuals to have peace of mind regardless of how it plays out.”
The prospect of the estate tax exemption reverting to its lower levels has broad implications, especially as more than $84 trillion in wealth is expected to pass from older to younger generations over the next few decades. The potential tax changes have accelerated gifting, with many families moving assets ahead of the 2025 deadline to avoid paying higher taxes in the future.
Survey reveals a majority consensus of just three reductions next year, even counting Trump's prospective tax and tariff policies, as progress on inflation slows.
The settlement, stemming from accusations of underperforming Wells Fargo target-date fund investments affecting some 300,000 plan participants, is considered among the largest of its kind.
Western International Securities was acquired by LPL this year.
David Fulton, the RIA giant's decade-long chief executive, is stepping down to be replaced by president Bradley Knapp on Jan. 1 as part of a planned transition.
The firms are extending their footprints with new recruitment moves in Arizona, Massachusetts, and Florida.
Financial advisors who come to the profession later in life have experiences that can help them connect with clients, said the founder of a group that trains career changers.
"The profitability of the CLO is going to be very attractive," said CIO at Flat Rock Global.
