The clock’s ticking for wealthy clients looking to find tax advantages when transferring assets to the next generation or selling their business—especially considering the looming, potentially watershed election.
“With a possible administration change and proposed changes to the capital gains rate, it might be wise to complete the transfer prior to year’s end,” said Julia Carlson, CEO and founder of Oregon-based Financial Freedom Wealth Management Group.
Democratic candidate Joe Biden’s tax plans include bumps in the top tax rate and lifting the Social Security taxable wage base cap on high earners. President Donald Trump’s plan seems fixed on extending the 2017 Tax Cuts and Job Act provisions beyond 2025, potentially meaning lower individual income tax rates. The candidates have reportedly failed to address in detail what one expert called “quiet levers” of wealth transfer, such as estate transfer tax rates, decreased lifetime estate and gift tax exemptions, among other factors.
For additional reasons beyond the election, “this may be the most opportune time for wealth transfer in recent memory,” said Joe Roberts, senior vice president and senior wealth strategist at Rockefeller Capital Management in Philadelphia. “We have the highest estate tax exemption and the lowest intra-family interest rates in history. That combination alone is significant, but layer in the knowledge that estate and gift tax exemptions may be lower next year and business valuations might be depressed by the current economic environment, and you have an opportune moment.”