For many clients in the mid-range, we can pretty much take care of the issue in the first paragraph below with Clayton election planning. (HNW clients may benefit from other advanced techniques such as NING trusts.)
The issue in the second paragraph below (changes to IRC 2704 regs) presents a great deal of uncertainty for HNW clients. It may be that the only certain way to avoid raking fire from the possibly retroactive effect of the regulation is to engage in large gifting prior to November 30 (regardless what happens in the election) — a tall order for families with other priorities over the Christmas season.
For instance, the tax plans proposed by the presidential candidates are wildly different for HNW investors. Clinton’s plan would raise taxes for the highest earners and lower exemptions, while Trump would offer more breaks and repeal the estate tax. The only areas where the two candidates seem to agree are in harsher treatments of carried interest and foreign earnings, neither of which bodes well for wealthy taxpayers.
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Another source of client discomfort is the IRS’ proposed changes to family business valuation discounts. If the current proposal is finalized, the regulations will remove a valuable tool from advisors’ toolboxes by ignoring some liquidity rights on intra-family transfers of family businesses (among other changes). However, PwC’s advisors think there’s a strong chance the changes will soften once the final regulations are released.
