Trust and Estate Counsel

Tennessee Estate Planning Law

Insight and commentary on estate planning issues impacting affluent residents of Tennessee

Are You Feeling Poor Today?

I have noticed that a lot of my wealthy clients are uneasy about their financial situation. The values of their marketable securities are lower. The value of their real estate is lower. Their income is lower.

The attached article by Robert L. Moshman published in the Wealth Strategies Journal explores the plight of a hypothetical family that had a $20 million net worth prior to the recent recession. The article gave me a better understanding of why my clients with a net worth of $10 million or more are feeling so uneasy.

Clients with an 8 figure net worth have a significant estate tax liability. Low values, coupled with low interest rates, are a fantastic opportunity for various gifting strategies that can significantly reduce the future estate tax liabilities. However, because my clients are uneasy about “turning loose” their assets, I am recommending different gifting strategies.

The most popular strategies that I have used recently involve Spousal Access Trusts, Installments Sales to Grantor Trusts, and GRATS. All of these techniques allow the client (and/or the client’s spouse) to benefit from the property utilized in the gifting strategy, while reducing the value of the client’s estate for estate tax purposes. I am not planning on this shift being temporary. The emotional scars from the 2008 recession will profoundly affect the attitudes of wealthy Americans for years to come.