There are several key issues in wealth management that are notable. Let's review these futurist ideas and concerns.
- Estate tax rules are probably going be changed this year. Many will give millions each to children and grandchildren this year to avoid estate tax and gift taxes in the future.
- The federal estate tax and gifting exemption for 2021 is $11.7 million per person. It is double that for married couples.
- This threshold will probably go from $11.7 million down to $2 million-$3 million.
- Corporate taxes may also be increased from 20% up to 28%.
- COVID-19 has also created many issues in estate planning.
This will cause several movements in money and strategy
- Lawyers, accountants, and insurance pros will be busy through the end of the year.
- Life insurance sales will increase dramatically to wealthy families and business owners.
- Life insurance testing will increase dramatically. If you are healthy and insurable, consider yourself lucky that you can buy affordable insurance under the COVID-19 world we live in.
- The super wealthy may begin moving their corporate business activity offshore.
- Less money may be repatriated to the U.S. by U.S. companies.
- More folks will look for ways to invest in physical gold and physical silver.
- More folks will invest 5-10% of their wealth into crypto currencies provided it can effectively be hidden from estates using legal strategies.
- Countries such as China will have their own crypto soon.
- “Second to die” insurance will be popular again for families and trust planning.
- Many insurance companies will prosper such as: Manulife (MFC), Hartford (HIG), Aflac (AFL), Prudential (PRU), Sun Life (SLF), and Met life (MET).
- Various types of trusts will become a strategic necessity again including living trusts.
- Charitable giving, foundation creation, and other tax strategies will become more popular.
- “Key Executive” insurance and “cross purchase agreement” insurance may become more popular again.
- Leaving states with high income taxes or high estate taxes may also be stimulated.
- Establishing offshore companies in places like Dubai may again be inspired due to avoiding corporate, retained earnings, or estate taxes.
- Variable annuities may become popular again because 401(k)s are at an all-time high and can be rolled over to an annuity for retirees. Further annuities can be purchased with various features including a) Insurance and death benefit component b) Other features which may preserve principal contributions from a stock market correction.
- Many speculate that crypto currency and blockchain are still risky, can be hacked and that these types of assets an uninsurable in contrast to SIPC and FDIC accounts.
Due to globalization and people with multiple citizenship along with the use by the super-wealthy of: foundations and charities, nobody is really sure if the super-rich will even be affected by new taxes as the super-rich can move highly appreciated shares into a non-taxable vehicle, swap shares for other assets, or even move assets to another nation.
We will see over the coming months and years. To be sure, corporate tax hikes will not facilitate any more corporate tax payments as corporations will just spend or invest the profits to avoid taxes. The above list is just to stimulate your thinking about your choices and financial strategy for wealth management. Please consult a locally licensed professional for making any important financial and legal decision.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.
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