WealthCounsel and Trusts & Estates have the preliminary results of their annual survey to identify trends in the industry and to find out whether clients took advantage of the $5.12 million gift tax exemption in 2012 and what changes they expect in 2013.  The results indicate that there were few takers for the $5.12 million exemption, and respondents expect business to improve in the next five years.  Complete findings from the survey will be published in a full report in January 2013 and will be available on the WealthCounsel website at www.wealthcounsel.com, as well as in the January issue of Trusts & Estates. But in the meantime, here’s a sneak peak at some of the key findings.

 

“One of the most compelling data points to come out of this year’s survey is the fact that 94 percent of respondents expect the demand for business succession planning to increase as a result of retiring baby boomers,” said WealthCounsel’s CEO Matthew T. McClintock.  “Professionals in the planning industry are certainly aware of the opportunities that this generational shift presents.  More importantly, attorneys and advisors know how important small businesses are to the owners, their employees and to the economy at large.”  McClintock added.  “The survey data also indicates the clear correlation among financial planning, estate planning and business planning, and it further supports the notion that many of the various aspects of clients’ planning often overlap and intertwine.”
 

 Who Responded?

Of the nearly 1,500 respondents, 61 percent were estate-planning attorneys, while the remaining contributors included financial professionals, certified public accountants, bank trust officers and insurance professionals.  The participation from non-attorney professionals increased substantially from last year’s survey, where only 13 percent of the respondents were non-attorneys.  “Serving the client’s needs requires an interdisciplinary team approach, and we are pleased to see the growing numbers of financial professionals who are joining attorneys in participating in this annual data gathering event,” said McClintock.

 

5.12 Million Gift Tax Exemption

Although clients had the opportunity to make large gifts in 2012 without paying federal gift tax, only 26 percent of respondents report that their clients took advantage of the $5.12 million exemption.  Most clients who opted for this strategy had a net worth of $10 million or more.  The 74 percent who reported that their clients didn’t opt for the exemption cited various reasons, including clients’ concerns about giving assets away and later needing them, as well as clients’ uncertainty about the election results.

 

Business Growth

Respondents saw an improvement in business growth, with 71 percent of respondents experiencing growth in 2012, compared to 59 percent in 2011.  And, 94 percent of respondents expect business to grow in the next five years, compared with 89 percent in 2011.  Most respondents agree with the experts that demand will increase for business exit and succession planning, with the majority of American businesses owned by baby boomers who are at or near retirement age.  The survey results also show that referrals and networking are the key business generators for most.

 

Expected Tax Increase

A whopping 97 percent of respondents expect taxes to increase in 2013, suggesting the industry’s lack of confidence that Congress and the President will agree to a compromise before the expiration of the Bush-era tax laws.  Also, estate-planning professionals expect the economy to continue to suffer from the lack of long-term solutions to tax and budget issues.