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As summer is starting to wane (before it ever really got going!), I took the time to try to look around the corners of wealth management for clients with BILL SWEET. We discussed today’s estate planning environment and the many challenges and opportunities that currently exist and why it’s important to get going on that process now.

Bill is the CFO of RITHOLTZ WEALTH MANAGEMENT. Founded by Josh Brown and Barry Ritholtz, RWM has burst onto the wealth scene with a media savvy and marketing push that is different than most in the wealth management space. Bill manages the finances of RWM and is the resident expert on taxes for the firm’s clients. Bill was also a Captain in the U.S. Army where he presided over $12mm pieces of rolling thunder as a Tank Commander!

Military Experience

• Bill’s Experience as a Tank Commander
• The benefits of hiring Veterans and people with military experience:
  • Discipline
  • Experience with Structure
  • Responsibility
  • Honor / Principles
  • PhD in Getting Things Done
  • Ready pool of experienced employees

Links to Veterans Groups at the bottom for those with further interest. Our veterans are an amazing resource of talent in this country.

The Estate Planning Environment

Bill and I went into a wide-ranging discussion of the benefits of getting one’s estate planning done now and what might change in the near future.

• Interest Rates are at generational lows which provides extra leverage and flexibility in moving assets out of an estate.
  • This applies to many estate planning and intrafamily loan techniques that have incredible estate and wealth planning power
  • The current AFR rates are here: AFR RATES and IRS
• Valuations for assets are low due to the recent market volatility, which means a well-thought out plan can get more intrinsic value out of an estate.
• Federal Estate Tax Exemptions are at all-time highs: $11.58 million per individual, or $23.16 million per couple
• Federal and State finances are going to require more revenue implying an INCREASE IN TAXES. (and probably at all levels)
• The elections in November could have a massive impact on the generosity and flexibility of the current estate tax climate at the Federal AND State level.
• States hard hit by the COVID-19 epidemic may face particular economic and social concerns that require extra funding. (New York is a good example)
• There will be increased State scrutiny for those using low tax jurisdictions for INCOME AND CAPITAL GAINS TAX PLANNING.
  • Very brief discussion of domicile and residence and the art and science of personal state tax planning
  • It is more than just 180+ days and changing your car registration.
  • Here is a recent Supreme Court Case on the potential for double taxation at the state level: Edelmans’ New York Connecticut Residency Tax Case
• There is going to be a mad rush for a lot of families to accomplish their estate planning before the end of the year (and thus a mad rush around the advisors to implement this planning)
  • Beware of the 9/15 and 10/15 tax deadlines . . . accountants are just now catching their breath from PPP planning and the extended 7/15 deadline
  • Lawyers and financial institutions have not seen a potential crush like this since 2012. We anticipate EXTREME stress on entity formation, trust drafting and reviews, KYC processes and account opening. Waiting until November could be a big mistake.
• NYS Estate Tax Cliff
  • If you have a net worth of $5mm or higher in NYS, you need to revisit your plans to ensure that your STATE estate tax liability is as low as it can be and if there are any steps you can take to reduce it. My quick primer is HERE.
• Having health directives etc . . . in place because of COVID illnesses
  • I covered this in detail here: HEALTH DIRECTIVES
• Getting deposits in on nursing homes to make sure you have a spot locked in etc . . .
• Final thoughts on getting started even if you aren’t in the “1%”

Veteran’s Groups

• For veteran’s employment programs especially in finance, Bill suggested that I highlight the work of Won Palisoul and Chris Mendez on the CFA SOCIETY’S VETERANS ROUNDTABLE. Their goal is to create a network to facilitate veterans transitioning to a career in finance: https://twitter.com/billsweet/status/1192247303022825473
• For charitable organizations, Bill advocates for the FISHER HOUSE FOUNDATION – they provide zero-cost lodging for families who want to be near their service members while undergoing medical procedures and rehab. The DOD only provides room/board to the veteran / soldier themselves: https://twitter.com/billsweet/status/1162112234102972416