“With interest rates rising and some periodic market volatility, many are wondering if it’s time to adjust their portfolios. It’s important to recognize, though, that the real yield, adjusted for inflation, remains negative, and financial conditions remain very easy. We anticipate yields will remain range bound as growth and inflation slow. Secondly, we view volatility as a normal feature of the market, and corrections are more frequent than you think. Although high valuations do make markets more vulnerable to bad news – such as, recently, political uncertainty and supply constraints – we do not think that recent market action should drive portfolio activity. We do think – we always think – that a proper annual balancing strategy is important to keep your portfolio aligned with your financial goals.”

— Katie Nixon, Chief Investment Officer

“The still low interest rate environment creates an opportunity for individuals and businesses alike to leverage assets to address year-end tax planning and other liquidity needs. Whether it's borrowing to exercise stock options, fund lifetime gift exemptions and dividend recaps or simply maximize the tax efficiency of real estate property, conditions are uniquely favorable. This is a good time to evaluate your balance sheet and identify opportunities to use leverage to accomplish goals and complete strategies.”   

— Glenda Pedroso, National Practice Executive, Banking

“This year-end we once again find ourselves planning in the face of tax uncertainty. Even if we see meaningful changes, history shows taxes will continue to fluctuate as economic and political environments shift. Thus, we strongly urge you to build strategies around your long-term goals, rather than policy predictions. Take the time to craft a thoughtful statement of intent that reflects your long-term goals. Consider incorporating flexibility in your plan, such as naming a trust protector to make changes to your trust to navigate changing circumstances; changes that are guided by your statement of intent.”

—Pamela Lucina, Chief Fiduciary Officer, Northern Trust

“With estate/gift tax exemption possibly being reduced to $5 million (adjusted for inflation) as of year-end, execute any pending plans to transfer assets into trusts to fully leverage the historically high exemption amount. Consider several planning strategies that will allow you to retain decision making authority over these assets during your lifetime, such as:

• ► Establishing a directed trust with you as investment advisor.
• ► Recapitalizing shares of a business into voting and non-voting shares and funding a trust with the non-voting shares.
• ► Appointing an individual co-trustee to serve with a corporate trustee and giving the individual trustee the deciding vote in case of deadlock on major decisions.

— Laura Mandel, Chief Fiduciary Officer, The Northern Trust Company

“Set aside some time during the holidays with your family to draft a family cornerstone statement, which captures the family’s shared values and long-term vison of success, and includes actionable steps to bridge the current and desired future state. Research shows that the majority of generational wealth transfers ultimately fail, not due to poor estate planning or failed investments, but due to the breakdown of communication and trust. Creating a family cornerstone statement is often a family’s first step in engaging across generations, helping them align on what is most important and make better decisions together.”

— Amy Szostak, Director of Family Governance and Education

“Imagine your future-self five, 10, or even 20 years from now. How would your future-self react to the planning decisions you choose to make (or do not make) this year? For example, what would your future self say to you if you set up a donor advised fund for your kids, or agreed as a family to schedule a family meeting every six months to discuss the family’s values and long-term goals? Clients who do this simple exercise are often motivated to consider and implement changes to their wealth plan that they have otherwise been putting off.”

— Stan Treger, Director of Behavioral Insights

“Consider taking inventory of the charitable organizations that are currently supported by your family members by asking:  

• ► Are the efforts of these organizations still aligned with your family’s values?
• ► Are the services provided still relevant, necessary and up-to-the challenge in this ‘new normal’ that is still being defined by the pandemic?
• ► What can you do to hold these organizations accountable for achieving impact?
• ► Is the current giving scattered and unfocused?
• ► Is it time to re-evaluate current giving practices, consider different organizations that may need capacity-building support to continue helping the local community where family members are located?”

— Marguerite Griffin, Director of Philanthropic Advisory Services

“Proposed changes to tax policy, SEC rules and interest rates will greatly impact executives if passed, making this an apt time to strategically plan. First, consider exercising non-qualified stock options that are near expiry to realize income and take advantage of lower income tax rates. Second, if aligned with wealth transfer goals, consider funding a GRAT with company stock expected to appreciate before limitations are enacted. Third, execute a Rule 10b5-1 plan before a mandatory cooling off period is instituted and single trades are banned from affirmative defense protection. Last, with rising interest rates on the horizon, leverage a concentrated stock holding as collateral to access cash at a low interest rate without selling stocks that incur tax consequences, all while maintaining the concentrated position or company stock holding requirement.”

— Devin W. Blackburn, Director of Executive Wealth Advisory and Senior Tax Counsel

 “Living through a global pandemic has reinforced the wisdom in always being prepared. Being ready for anything starts with understanding where your necessary information lives. From financial to health and legal records, access to key information should be at your fingertips. You also need a clear picture of not just what you own, but also what you owe, along with an idea of how cash flows into and from your household. Last, set up an emergency action plan so that should something unexpected happen, you already know what your first steps to re-establishing order will be.”

— Steph Wagner, Director, Women & Wealth