Displaying items by tag: inheritance

Tuesday, 23 November 2021 18:13

Rich Clients May Get a Big Tax Cut from Biden

The $2 trillion Build Back Bill pushed through a contested House of Representatives last week and the climate and social-focused stimulus bill have a complicated tax code in order to garner support. BBB features a dynamic tax system with moving parts that evolves as years develop. Most significant of which is a tax break of about 5.4% relative to current legislation for those earning more than $1 million a year. This tax breaks scales down in income down to $75k, but spikes below that. However, this tax break is very temporary as the lion’s share of the legislation will be paid by higher income individuals. There are other benefits for the rich such as SALT relief, but by and large, starting in 2023 higher corporate taxes and a bump in personal income taxes of 5% will begin to take effect.

FINSUM: Biden’s BBB could be a bad storm of events for the economy where stimulus boosts inflation and higher taxes keep markets and real growth from keeping up.

Published in Wealth Management
Monday, 15 November 2021 17:23

Biden’s Death Tax Just Took a Big Hit

Since May, President Biden has been pushing a social spending bill that would significantly increase the US’ social safety net and do so by raising taxes on the wealthy. The two primary tax changes Biden is planning for individuals focus on inheritance taxes and capital gains taxes. These plans have spooked US advisors and their clients because collectively they could create some very significant increases in taxation. However, Biden’s plans for the whole bill seem to have taken a major hit in the last few days, as the very hot inflation reading on the economy has many politicians considering whether a huge spending bill would only worsen the issue.

FINSUM: We have been following this saga very closely and we believe the inflation numbers are the death knell for this bill. Biden was already facing major opposition on spending and taxes in their own right, and now some of the benefit of the economic firepower is being called into question.

Published in Wealth Management

Over a hundred and thirty nations have already consented to the global minimum corporate tax, and that number just got a little larger as all G20 came forward to endorse a 15% global minimum tax rate. This was a huge win for the Biden administration and secretary Yellen who have been strong advocates, but they still face hurdles with the domestic tax code in the Build Back Better bill. The administration said that the other G20 understand the minimum could take time with Republican opposition and Democratic infighting dominating congress, and the official timeline for the G20 will roll out at the end of the week. The other topic that is driving the G20 are the world's energy shortage which is on the forefront of everyone's minds, and how the world can come together to spur production.

FINSUM:The current form of the Build Back Better legislation aligns the U.S. with the global minimum and extends tax credits for millions of low-income Americans, but we’ll see if that makes it through the Congress at the end of the week.

Published in Wealth Management

We’re in the middle of the largest generational wealth transfer of all time. The Baby Boomers, previously the largest living generation, are expected to pass down roughly $68 trillion over the next 25 years to the Millennials...see more on our partner's site

Published in Alternatives
Tuesday, 07 September 2021 14:38

How Clients Can Get Around Biden’s Big Tax Hike


Since May, the prospect of huge tax hikes on the wealthy has weighed over the advisor and HNW landscapes. Biden is planning to significantly increase capital gains taxes, and most alarmingly, is planning to get rid of the step-up in basis at death. With that in mind, a new product has been surging to the forefront as the work-around to Biden’s new proposals: private placement life insurance. PPLI is a type of life insurance where payouts flow through to beneficiaries tax-free. However, they are complex for clients to understand and take some significant diligence. According to a law professor at the University of Chicago, “Private placement life insurance poses a serious obstacle to President Biden’s goal of guaranteeing that high-income individuals pay tax on large gains at least once per lifetime … PPLI is a massive loophole — entirely legal, easy to exploit, and politically very hard to close”.

FINSUM: So this seems to be a good, if complicated and restrictive, work-around to the inheritance tax issue, but it does not address capital gains.

Published in Wealth Management
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