Advisors to the wealthy are fielding a frenzy of calls from clients worried about estate planning and taxes. Here’s how they’re navigating the chaos.

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Charity Falls, a senior wealth strategist at Union Bank, says her job is to address anything that keeps her high-net-worth clients up at night.

Over the past 13 months, that list of things has gotten much longer.

After her San Diego office went remote in March of last year, business was quiet at first. “It was like a frozen panic,” she told Insider. “Then it went crazy.”

Clients, fearing both COVID-19 and potential tax changes by a Biden administration, raced to make estate-planning changes. With the rollout of PPP as well as the enactment of the CARES Act and the SECURE Act, Falls worked day and night to follow developments and keep clients updated.

Advisors to the rich on estate planning and taxes told Insider that 2020 was the most chaotic year of their careers, and 2021 will also be a challenge.

With a Democratic congress and president, high-net-worth taxpayers are in the crosshairs. There are several concerning proposals, such as the STEP Act, which would tax capital gains on unsold assets at death, and the For The 99.5% Act, which would do away with valuation discounts on asset transfers. Biden’s reported plan to nearly double the capital gains tax for the wealthy is just icing on the cake.

“Every time there are estate and gift tax changes, my phone rings off the hook,” Falls says. “These new proposals in Senate would completely upend estate tax planning as we know it.”

‘Call me in two months, and 90% of what I said will have changed’

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Last spring was a “sobering time” for Edward Renn, a partner on law firm Withers’ private client and tax team who is based in Greenwich, Connecticut.

“I thought the economy might totally shut down and plunge in terms of stock market values and assets values,” Renn told Insider. Some of his clients wanted to take advantage of the market dip, while others were alarmed like Renn, asking if they should sell their entire stock portfolio.

He worked 60- and 70-hour weeks for the first four months of the pandemic between dealing with clients and educating the firm’s accountants on the stream of new legislation at least two times a week. Many clients who owned businesses applied for funds from the Paycheck Protection Program (PPP), which extends loans to businesses in order to incentivize keeping workers on payroll. The updates to PPP were an added burden, multiple advisors said, especially the changes to eligibility for loan forgiveness made after loans were already extended.

“Only part of the problem is the number of pieces of legislation we’ve been dealing with. The IRS and the SBA have also modified programs over time,” Renn said. “The PPP loan program that was announced on March 27 wasn’t the PPP loan program we had at the beginning of May, and it wasn’t the PPP loan program we had in the fall.”

More than a year after the introduction of PPP, the confusion hasn’t ended. Phil Drudy, New York tax practice leader at accounting firm Mayer Hoffman McCann, does …read more

Source:: Businessinsider – Finance

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