Happy Thanksgiving, Reader

The weather has been cooling down, and we're starting to see the first signs of the fabulous South Florida "winter." I, for one, am excited about the upcoming holiday season. Spending time with my loving family is something I truly treasure, and adding turkey and cranberry sauce to the mix only makes it that much better.

I hope you and your family have a great Thanksgiving as well.

Can An Inheritance Be "Too" Big?

To many people this might sound like a ridiculous question, but a recent Motley Fool survey found that it is a real concern for individuals with significant assets and wealth.

The survey asked a series of estate planning–related questions to Americans with a net worth of +$1 million. One of the most fascinating findings is that 67% of the respondents were concerned about leaving too much of an inheritance to their heirs. The respondents also largely agreed on why they were concerned about the size of the inheritance:

1. The assets would be used irresponsibly, and
2. The heirs lack the skills to manage a large estate.

But these concerns are not the sole purview of the very rich. Those with smaller or more modest estates may also be worried about their heirs’ financial responsibility or their ability to manage assets. Fortunately, a number of options are available to address these issues.

Bipartisan Infrastructure Bill Becomes Law

On November 15, President Biden signed into law the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act.

Although the bill is light on tax policy provisions—the upcoming budget reconciliation bill will contain many more—there are a few noteworthy exceptions:

• Crypto Reporting: Imposes new crypto asset reporting requirements. Brokers must provide information returns on any transfers of digital assets to accounts that are not maintained by a broker. The definition of "broker" is expanded to include anyone who is paid to make "transfers of digital assets on behalf of another person,” and "digital asset" is defined as "any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology." This provision is estimated to raise $28 billion over a 10-year period.
• Employee Retention Credit: Terminates the employee retention credit three months earlier than scheduled by restricting it to applicable wages paid before October 1, 2021 (rather than January 1, 2022). This change is estimated to raise $8.2 billion over a 10-year period.
• Pension Funds: Modifies the applicable minimum and maximum percentages with respect to certain pension plans (so-called “pension smoothing”). Reduces the level of deductible employer pension contributions required under the pension funding rules. These amendments apply to plan years beginning after December 31, 2021 and are estimated to raise approximately $2.9 billion over a 10-year period.

The good news is that many of the most impactful tax policy reforms were not included this first piece of legislation. These include:

• Increases to the capital gains rates,

• Elimination of step up in basis,
• Changes to rules governing grantor trusts,
• Lowering of valuation discounts,
• Increase to the corporate tax rate,
• Changes to the estate and gift tax rates,
• Decreases to the gift and estate tax exemptions (N.B. these exemptions will raise in 2022 per inflation to $12,060,000, and the annual gift tax exclusion will raise to $16,000),

These changes still could pass through the Build Back Better Act, the larger budget reconciliation bill, which is heading for a vote soon. The wording of this bill has changed dramatically since its introduction (and twice in the last week), so it is unclear what provisions will ultimately make the cut.

New Guide: End-of-Year Estate & Tax Planning

As 2021 draws to a close, it is important to take stock of your current estate, asset protection, and tax mitigation strategies. Before the end of the year, you should address eight key areas to ensure your family’s estate plan will continue to protect and preserve your wealth, whatever the future holds.

To help you in this, I’ve put together a short guide on End-of-Year Estate and Tax Planning.

​Download a free copy right now!​

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Thank you, as always, for reading. I sincerely appreciate the trust you place in me to provide you with updated and useful estate planning guidance. If you have questions about what you should do to prepare for the transition to 2022, please call me at 561.998.2362 to set up a time to talk. And, if you have any friends or family that could benefit, I'd be happy to help them as well.

Sincerely,