When the topic of estate planning comes up, talk about taxes is soon to follow. That train is rarely late. Taxes are important, but they aren’t what keeps planners up at night in 2018.
According to a recent TD Wealth survey of 109 attendees of the 52nd Annual Heckerling Institute on Estate Planning, including attorneys, trust officers, accountants, charitable giving professionals, insurance advisors, elder law specialists, wealth management professionals, educators and nonprofit advisors, family conflict is what they’re really worried about.
Forty-four percent of planning professionals identified family conflict as the biggest threat to estate planning this year, followed by tax reform (25 percent) and market volatility (12 percent).
One potential explanation for these results is that The Tax Cuts and Jobs Act is getting mixed reactions from planning professionals. Nearly half (49.5 percent) believe tax reform will help clients, while 34 percent aren’t sure and 16 percent anticipate a negative impact.
“The Tax Cuts and Jobs Act brings about the biggest tax reform change we've seen in years, and for those planning an estate, it may introduce an opportunity to potentially reduce future transfer taxes,” says Ray Radigan, Head of Private Trust at TD Wealth.
Despite this uncertainty, nearly three-quarters of estate planners agreed that clients who do benefit, will do so the most from wealth transfer tax changes. Thirty-six percent of those surveyed believe clients will see the biggest benefit from new estate tax laws, followed closely by generation-skipping tax (28 percent) and gift tax (13 percent) updates. State transfer tax (11 percent) and corporate pass-through tax (7 percent) brought up the rear.
Additionally, over half (53 percent) shared that guardian and beneficiary designations as the most difficult document for clients to tackle when building an estate plan; with current wills (17 percent) and powers of attorney (16 percent) vying for second.
“Losing loved ones can be difficult, and talking about what happens when a loved one is gone can be even tougher. We encourage families to start the dialogue early, and make sure they have the right people around the table from the beginning. That includes financial advisors, tax advisors, lawyers, accountants and family members.” says Radigan. “With such significant changes to wealth transfer taxes, it’s more important than ever that individuals and their families come together to develop a cross-generational financial plan.”
