Preserving Family Wealth: What Should Your Clients Do Now?

Even with uncertainty as to the future of estate tax law, there are family wealth preservation techniques that should be considered now by clients having substantial wealth.

What should your clients do now? According to veteran tax advisor, Owen G. Fiore, these are some things to think about for 2010:
1.    Succession Planning: Whether or not there is an estate tax liability facing a client, there remains the fact that the uncertain timing of death poses issues of succession planning – asset transfers to heirs and considering identifying the successor manager, especially where closely-held business or investment entities are involved.  Are the wishes and goals of the client(s) well developed and understood?

2.    Gifts: Is 2010 the year to make larger, taxable gifts, at the 2010 lower gift tax rate of 35%?  Is 2010 the year to use up client(s) lifetime exemptions?
3.    Intra-Family Loans and Sales: AFR (Sec. 7872) minimum interest rates, for income and gift tax purposes, are extremely low (e.g. Sept. 2010 mid-term AFR rate: 1.94%!). Should loans to younger family members be considered now?
4.    Valuation Discounts: With the possibility of adverse legislation on discounts looming, should 2010 include use of entities with valuation discount planning?
5.    Life Insurance: Is 2010 the year to make gifts of insured-owned life insurance without worry about the 3-year rule of Sec. 2035?
6.    Wills and Contingency Planning: Does the client need a new or updated Will before the end of 2010? What about the substance and liquidity results of the Will, if no estate and GST taxes, and thus family inheritance nearly twice as large?
7.    Generation-Skipping Transfers: Is 2010 the year to make GST gifts – free of GST tax this year?
8.    Qualified Plans, IRAs: Is 2010 the year to make a Roth IRA conversion?
9.     Charitable Giving: Can the client afford the usual charitable gifts in 2010?
10.  2010 Deaths – Estate and Trust Administration: Did your client die in 2010, or are they terminally ill now?
To learn more about estate planning, family business entities, valuation discounts and special uses of gifts, loans, sales and trusts to maximize wealth preservation, check out the upcoming trilogy of Family Wealth Preservation webcasts from Owen Fiore and CPE Link which begins October 5.

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by Sue Anderson - Based on 30 years of experience in continuing education for accountants. Currently program director for online CPE provider, CPE Link. Formerly with the California CPA Education Foundation managing key operational areas including marketing, program development, and distance learning.

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