Wealthy families or their advisors rarely appreciate hearing the term “generation-skipping transfer tax” (GSTT) The nuances of this specific tax law can be quite complicated, but there’s a reason for it: families and individuals often enjoy giving from one generation to the next, and the GSTT offers a fixed rate that ensures such gifts are taxed appropriately.
There is a recent study from Boston College’s Center on Wealth and Philanthropy, an estimated $59 trillion will be transferred from 2007 to 2061. While not all of that is subject to the GSTT, it does illustrate how important such a tax is today – and will become for the future (simplistically thinking about our federal deficit and the upward trending expectations for servicing our debt through higher taxes—the government will get their cut!).
The Department of Labor (DOL) will be coming out with a major decision next week that will effect virtually all financial professionals and clients, as they provide guidance that addresses the most
important decisions of our financial lives; what to do with clients 401(k) once they retire. Retirement investors are harmed – primarily in the form of higher costs and lower retirement savings –
when they receive conflicted advice that puts the adviser’s interest ahead their own.
By requiring fiduciary accountability for all advice related to retirement assets, the rule will provide much needed protections to help retirement investors navigate the complex and confusing financial services marketplace.
For many Americans, whether to rollover and how to invest their retirement nest egg, is one of the most important financial decisions they will make as there is more than $14.4 trillion of retirement assets in 401(k) plans and Individual Retirement Accounts (IRAs). Under the current regulatory framework, all advisers are not required to make rollover IRA recommendations in their clients’ best interest, leaving Americans subject to conflicted advice related to their retirement savings.
We recently hosted an expert team of six highly regarded advisors to have an open discussion and brainstorming session focused on how best to serve successful families, along with the inevitable complexities and nuances of managing different aspects of their significant wealth. Among this group included specialized experts exclusively serving financially successful families, business owners, and C-level executives. The players around the table included an estate attorney, a consultative tax professional (CPA), a life insurance advisor, a high-end property and casualty insurance agent, and two comprehensive wealth management professionals.