high net worth
self-settled trusts > 51
Advisors have been racing to finish
what some say is an unprecedented
transfer of wealth.
By Ann Marsh
The year-end scramble is on. Planners and estate lawyers around the coun- try are facing an unprecedented rush of clients seeking to
transfer wealth to their descendants
because Bush-era tax exemptions
may expire at year’s end.
And planners who lack familiarity about estate laws could wind up
inadvertently keeping clients from
taking advantage of a rapidly closing window that may never reopen,
several lawyers say.
“The wealth we see being transferred this year could be 20-fold
[that of] any prior year,” says Martin Shenkman, an estate planning
attorney in Paramus, N.J., who has
begun turning away new clients for
the first time in his career.
“In 30 years of doing this, I’ve
never seen this many people of
means trying to plan in such a short
time frame,” he adds. “People ...
are panicking. Never have I seen
the system of estate planners, the
accountants, the lawyers and the
appraisers so backlogged that they
are refusing to take more work on.”
A primary reason for the urgency:
The combined estate and gift tax
exemption, which currently stands
at $5.12 million, is scheduled to drop
to $1 million next year unless law-
makers act. The change is commonly
understood by clients, Shenkman
and others say, and has generated a
flurry of phone calls and activity.
D YNAST Y TRUST CRACKDO WN
That points to another, less well
understood issue that’s complicating
the end-of-year frenzy: an expected
Obama administration clampdown
on dynasty trusts.
Currently, high-net-worth investors can place assets into dynasty
trusts that, over time, will keep
those assets out of the tax system
for hundreds of years — or even in
perpetuity, depending on the rules
of the states in which the trusts are
Now, Shenkman says, with the
administration and Congress in discussions to resolve the so-called fiscal cliff, the White House is seeking
to limit the time frame over which
assets may be protected, to just 90
years from the date when a trust is
created. If this change becomes law,
December 2012 Financial Planning 45