The vote by the House of Representatives to repeal the estate tax made the headlines when nay-sayers spoke publicly that this was only good for the rich. It also is good for the financial planner who serves the very rich.
Because it looks as if the estate tax will be banned over a 10-year period, those in high incomes or with large inheritances will have to make some very heady decisions as to what to do to lower their tax liability. With the estate tax no longer a factor, financial planners will have to be increasingly creative with their strategies and tactics.
As a result, advisory services will become very important. In addition, analysts predict the insurance industry and charitable contributions will suffer.
Insurance often is used to pay off estate taxes, but now that no longer will be relevant. In a similar fashion, bequests often are made with charitable contributions to reach the same goal. Analysts say nonprofits who always have relied on bequests for funding may want to begin looking elsewhere for money.