Unless you’ve been hiding under a stone, you’ll have noticed there’s an election in the offing.

Mark Twain is credited with the witticism that, if voting ever changed anything, they wouldn’t let us do it! However you think about the democratic process, one this is certain – it creates uncertainty and that requires family offices to make contingency plans.

The political climate of a country directly influences its economic policies, which in turn affects family fortunes. Good financial practices are built on pro-active planning.

In the USA, the three biggest expenses are Income Tax, Estate Tax and investment fees. The current administration brought about the most significant tax changes since 1986. And these have been favourable for HNIs.

With the upcoming presidential election, and state coffers made lighter by the pandemic, the course of future taxation laws is uncertain. But we have a narrow window to think about the repercussions of the election result, whichever way, and pro-actively plan for it. Estate planning should never be thought of as a one-time activity. It should be a series of on-going conversations spanning over many years, even decades. It needs to be flexible enough to accommodate changes. There are multiple estate planning tools which families can use before year-end which allow for flexibility post-election. Being ready with a plan to tackle change, whether or not it is executed, prevents knee-jerk reactions. – Jay Goldfarb, Managing Director at Fortis Management Group LLC, a Multi-Family Office in Waltham Massachusetts.

Regardless of What Happens to the House on the Right,
Prepare for Some Changes from the House on the Left

The 2020 election notwithstanding, a federal deficit driven by the pandemic to an unsustainable $3.1 trillion will likely prompt changes to U.S. tax policy and narrow the window for proactive tax planning. Still, says Fortis Management Group’s Jay Goldfarb, estate-planning tools exist which families can use before year-end to maximize their options irrespective of who wins the White House.

Two of the handiest devices for tax planning are the lifetime gift/estate tax exemption and the generation skipping tax exemption. Transfers to the subsequent generations are irrevocable. To maximize the tax exemption on such transfers, families have to decide how the bequest will take place. It could be a direct transfer or routed through a trust. Families also need to consider the kind of asset they are passing on.

Decisions will have long-term repercussions; they should not be made in haste. With an election just over the horizon, there’s little time remaining, but that should not stop families or their advisors from taking stock and thinking through possible scenarios, says Goldfarb.

Because ease of transferability often depends on the asset class – e.g., private equity stakes may require inputs from valuation experts and attorneys – planning should be continuous, and decisions not made in haste.

Take advice, plan, and consider the implications. They’ll have an impact beyond the next four-year presidential term.

Fortis Management Group LLC is an Asset Vantage customer.

Speak to us and let us show you how AV can help you seek certainty in uncertain times.