Resource Search

The 2017 Tax Cuts and Jobs Act left many of the rules and laws pertaining to retirement planning unchanged. However, the Act did change the tax landscape for many by lowering overall tax rates for individuals and businesses and changing deductions. Given this new landscape, there are additional opportunities and new twists for taxpayers to be mindful of in order to take full advantage of planning for retirement in the most tax-efficient manner.

Under the current U.S. tax code, there are three critical areas that can help high-net-worth individuals, families, and business owners maximize their wealth planning potential. We frame these areas in the form of corresponding emerging themes—estate tax, income, and charitable planning—and propose actionable strategies. This is just a first step, one that will inspire many conversations to help ensure that your wealth plan keeps pace with the tax reform changes.

In late 2017, the sweeping tax reform was passed in the United States and created incredible opportunities for estate planning for high-net-worth families. It also served as a good reminder to review your estate plan to be sure that it is consistent with your current goals and is flexible to promote tax efficiency under today’s tax laws—as well as the unknown tax laws of the future.

The Tax Cuts and Jobs Act of 2017 is sweeping in its reach, and divorce situations are not immune from its influence. The new tax law changes the tax treatment of alimony for both the payer and the recipient. For divorces finalized prior to January 1, 2019, this new tax treatment will not apply and will be grandfathered under the rules of the prior law. It is important to review your settlement agreement in light of these tax law changes, and consider modification of an existing agreement if appropriate.

With the passage of the Tax Cuts and Jobs Act in late 2017, virtually all areas of federal tax law saw sweeping changes.

Is philanthropy one of your top priorities? One way to make your estate plan more philanthropic is through a Charitable Remainder Trust (sometimes called a CRT, CRUT, or CRAT, depending on the form it takes). The Trust is created until the end of the trust term or the death of the last beneficiary. At the end of the trust, whatever is left over (the “remainder") is distributed to the charity of your choice. Other advantages of creating a CRT include providing an income stream, enabling an immediate charitable deduction, and reducing federal estate tax liability.

In a summary of the tax law signed on December 22, 2017, there are still seven individual tax brackets, but the top rate was lowered from 39.6% to 37%. Most of the law's provisions became effective on January 1, 2018, with numerous provisions expiring after 2025. Like most tax laws, it is neither positive nor negative in and of itself; rather, its effects will vary according to taxpayers' individual circumstances. The bill includes both personal and corporate tax changes, including key provisions applicable to high-net-worth individuals.

Reviewing the changes to the Tax Reform law from the lens of tax-efficient giving, it's clear it created some philanthropic winners and losers for the next few years. With the elimination of the phase-out of itemized deductions, donors who itemize can take advantage of the full amount of their charitable gifts, subject to Adjusted Gross Income limits. For donors who can no longer itemize, there are several good strategies to mitigate the loss of the deduction, including the use of IRAs, donor advised funds, and gifts of appreciated property.

Taxpayers who have identified opportunities to take advantage of the increased gift tax exemption before 2026, but have been hesitant to do so because of the risk of clawback, now find themselves on firmer ground for moving forward with those plans. However, with all of the ways and means of using the exemption, what should they do ... and why? We consider some ways and means of using it.