Tomorrow May Be Too Late!

In my other life I assist individuals, business owners and professional athletes with estate planning (providing my life in junior resource stocks doesn’t kill me first) while my associates provide an alternative to traditional financial planning (which is a greatly flawed process). I welcomed any U.S. resident who would like to know more on what we do to email me at [email protected]

Below is a message one of my advisory board members Bob Munoz has issued today and I urge all U.S. investors to pay heed to it:

While you may have been providing e-mails, newsletters and mailings to your clients to make gifts before the end of 2012, the reality is that many people who can benefit from this type of planning have yet to pursue it.  I would once again urge you to inform your clients to pay heed to your warnings as 2012 may be the last year for favorable wealth transfers.  While the main message is where appropriate they should make gifts before the law changes in 2013, many important nuances to the message have been ignored in that the popular media.  The key message is that many people, not just ultra-high net worth families, should be considering the value of certain 2012 planning options.  If your clients tuned out these messages because they do not believe their wealth justifies planning, they should reconsider. 

                Another critical issue that clients are not getting from the media blitz is that large gifts should almost always be held in a trust.  Though trusts raise a host of issues, many of which have special implications in planning, the right trust for the right clients could be ideal.  There are probably a multitude of reasons why clients are not acting.  We wanted to help you provide your clients reasons for acting prudently. 

                Many clients are suffering from uncertainty, yet, this should not be a basis for inaction.  Clients must understand if they do not act by the end of 2012 when most of the tax cuts expire, they will be facing a $1 million gift, estate and GST exemption, as well as, a 55% tax rate.  Clearly the President has “drawn a line in the sand” with some of his most recent statements.  He will not seek to extend the “Bush” tax cuts for the “wealthy.”  Thus, unless the President is not re-elected and Congress acts, the worst case scenarios on the horizon will occur.    For most people living in the state of New Jersey, a $1 million estate or more is not farfetched.   Moreover, New Jersey has its own estate tax with a $675,000.00 exemption limit.  However, New Jersey has no gift tax.  New Jersey only has a three (3) year look back as to gifts.  Thus, 2012 gift giving can be an excellent Federal and State strategy for most clients. 

                Strategies clients should consider include the use of trusts to provide for their heirs while further providing asset protection, divorce protection, generation skipping transfer tax benefits and other strategies.  In addition to gift giving, there can be sales to trusts depending upon the size of the estate. 

                While many people focus on the importance of making gifts under the $5+ million exemption, the special 2012 planning opportunities go far beyond the exemption.  It is important to note that for wealthy people for whom the $5+ million exemption is not sufficient, additional tax planning and estate freeze opportunities are available to leverage their wealth out of their estates. 

                It is getting late and last minute trust planning is not easy for the indecisive client.  Clients must be sure who their beneficiaries and trustees are going to be and which assets they want to place in any trust or provide as part of gift giving strategy.  

                Finally, there may be some cleanup work to do on other planning that had been done in the past.  Work we have performed with many of our wealthier clients shows some have failed to operate according to the plans they had previously established or the trusts that they had in place.  The availability of the $5 million gift giving exemption allows us to clean up the planning mistakes that were made in the past even though gifts may have been given in the past and not reported, not completed or the trusts themselves are defective.  Using the gift giving exemptions that are available in 2012 allows us to clean up many of these issues while complying with the tax laws.

                The time is “fleeting” and we are approaching the cliff.  Each of your clients should take one last look at their plan to determine whether or not they need to take action.  With only a little more than sixty (60) days before the end of the year and given all of the holidays that will be celebrated over the next two (2) months clients must act promptly.  Few if any plans can be finished the few days left before the end of the year, not because the documents cannot be drawn, but because many of the financial institutions will be on holiday schedules and completion of transfers may be difficult.