While concern over the seemingly imminent expiration of a historically large estate and gift tax exemption has been a dominant topic for estate planners in recent years, the preservation of that exemption through 2014 has highlighted other ongoing trends impacting the long-term asset management strategy of business owners and high-net-worth families.
While not new concepts for estate planners and wealth advisers, higher income taxes and the broader outlook for the economy have stepped more into the spotlight for 2014.
[caption id="attachment_85592" align="alignleft" width="200"] Nick Donovan[/caption]
"It's a different story than last year -- there's no imminent fear of changes," said Nick Donovan, partner and chair of the Succession Planning Group at the Napa-based law firm Gaw Van Male.
It was in January 2013 that Congress passed the American Taxpayer Relief Act, extending a number of temporary tax provisions enacted through various legislation following the recent economic recession.
High on the list of provisions expected to change was the combined estate and gift tax exemption, which allowed a married couple to combine their exemption and pass on more than $10 million in assets before or after death without penalty. Some anticipated the exemption would revert to the combined $2 million for married couples in place before 2010, closing a window that had provided huge flexibility in estate planning.
With that provision extended essentially as-is, other concerns, like the impact of a challenging economy on heirs, are catching greater attention.
With heirs possibly facing greater financial strain than their benefactors, the desire to plan long-term creditor protection has increased, Mr. Donovan said. Individuals are beginning to consider holding assets in trust for a longer period, past an age that might otherwise be appropriate for dispensing an inheritance to the beneficiary.
"It's a way to say that, if the kids go bankrupt or get into problems, the assets can be protected," he said.