Kitces.com’s lead monetary planning nerd Jeff Levine kicked off Holistiplan’s 2024 Tax Planning Summit final week with a presentation that underscored an essential however simply ignored lesson for monetary advisors aiming to ship added worth to their purchasers through tax-aware planning.
As Levine explored in the course of the occasion, it’s not at all times essentially the most difficult tax mitigation methods or essentially the most time-sensitive tax methods that lead to the most effective outcomes for purchasers. Sure, superior and extremely tactical tax methods have their place, however so do the plain previous tax fundamentals, like understanding how asset good points and losses are handled within the 12 months after a shopper’s loss of life. It’s surprisingly straightforward for advisors to search out themselves focusing an excessive amount of on the previous class and overlooking the latter, Levine says.
For instance, many advisors might discover themselves both asking or fielding questions in regards to the pending sundown of the doubled property tax exemption underneath the Tax Cuts and Jobs Act, which can shrink the property tax exemption to about $6.8 million per particular person.
Whereas that is doubtlessly an enormous deal for some purchasers, Levine defined, the truth is that only a few households within the U.S. even have sufficient wealth readily available to make the sundown deadline on the finish of 2025 imply a complete lot for his or her decision-making between now and the tip of subsequent 12 months.
On the flip aspect, although, a reversion of the earnings tax brackets to prior decrease ranges — which can also be set to happen beginning in 2026 until Congress acts to intervene — could also be of far larger significance for the standard mass prosperous and even high-net-worth shopper. So, it’s essential for advisors to maintain a balanced perspective and keep away from letting the hot-button problems with the day cloud their long-term fascinated by managing taxes.
To that finish, see the gallery for a evaluation of seven tax planning errors and misunderstandings that may journey up even essentially the most conscientious advisors, particularly when there are huge questions within the air in regards to the near-term future of huge tax insurance policies.