MIAMI If you havent changed your approach to estate planning recently, you should.
The status quo is stupid, said John Scroggin of Scroggin & Co. at the recent FPA Retreat here. Estate planning is a constantly changing environment.
Under the American Taxpayer Relief Act of 2012enacted in January of 2013the government permanently reduced the number of U.S. residents that will be subjected to a federal transfer tax. It is expected, according to Scroggin, that in 2013 roughly 3,000 estates will be subjected to a federal estate tax out of the roughly 2.5 million residents expected to die.
He explained that because of the implementation of the American Taxpayer act, planners must change their techniques and strategies when it comes to estate planning.
Scroggin outlined five elements of estate planning that are becoming so significant that planners cannot overlook them.
1) Reexamine every estate plan. Advisors should reexamine all the estate plans theyve done for clients, Scroggin says. Estate tax is no longer applicable to 98% of the American people, he says. Indeed, moving forward, planners need to reevaluate all of the estate planning that has been done for their clients through the view of this new policy.
Armed with this information, Scroggin says that moving forward, planners need to reevaluate all of the estate planning that has been done for their clients through the view of this new policy.
2) Shift focus to income tax. Scroggin makes it clear that under the new law, only the ultra-wealthy top, 1% of the income distribution will be subject to federal estate tax. Therefore, once planners work to reevaluate their clients estate plans the focus should turn to income tax issues and forgo federal tax concners because they will only be applicable to the wealthiest of clients.
3) Catch the mistakes before they happen. CFPs need to proactive, said Scroggin. They see more of the basis planning questions than the CPAs or attorneys do.
He adds that in many cases, once a CPA or attorney is involved the damage to a clients finance is already done. For instance, he warns planners to prevent letting unrealized loss carry over, because by the time its caught by a tax professional, its too late.
4) Talk to your clients children. During his presentation, Scroggin said that older advisors are having a difficult time keeping a clients assets under their management when that client becomes incapacitated.
Do you know your clients children? he asked the crowd of CFPs. Bring them on for free because one day they will acquire their parents wealth. He notes that this is one way for advisors to separate themselves from their peers.
5) Legacy planning cant be overlooked. When it comes to estate planning, Scroggin warned advisors that legacy planning cannot be taken lightly. After giving many examples he explained that he has personally seen family members brining each other to court based on a lack of legacy planning.
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