On September 18, 2020, Ani Hovanessian was quoted in the New York Times on flexible tax strategies to consider in advance of the presidential election.
According to the article, many advisers counseled their wealthy clients in 2012 that the estate and gift tax exemptions were going down and that the rates on those taxes were going up. But the opposite happened the next year, and people who had given away more than they might have otherwise were caught off guard. Few respectable financial advisers are handicapping the election and what it might mean for taxes and investment returns next year. But that doesn’t mean they are not providing counsel.
"We can't make predictions better than anyone else can," said Hovanessian. "But if we fail to plan, we plan to fail. Individuals aren’t going to work with me because we’re frozen like a deer in the headlights."
The main criterion for committing to a new plan now is that it is something you would have done eventually; thus it is best to focus on flexible and resilient structures that can withstand different outcomes.
The ultimate flexibility for couples is to create trusts that move the money out of one spouse’s estate but maintain the other spouse’s access to it. Called spousal lifetime access trusts, they can act as a safeguard against changes to a tax strategy that could backfire.
"You’ve completed and made a full transfer into the trust," Ms. Hovanessian said. “You have cut off personal rights, but you can have your spouse as a beneficiary. It’s your backdoor strategy to have access to the funds.”
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