Some Thoughts About Tax

Did You Know?

Many taxes are voluntary. In fact, the federal estate tax is COMPLETELY voluntary.

Ordinary income and capital gains tax

Many of our clients are business owners, and many also have property that has increased substantially in value over time. That may include stock in a closely held company, real estate, bitcoin or other cryptoassets, or collectible art or vehicles. This often means that there is massive state and federal capital gains tax liability waiting for them when they get ready to sell. We help our clients strategically eliminate or defer that capital gains tax liability by taking advantage of opportunities under the Internal Revenue Code and under the laws of more attractive jurisdictions.

For people with high income, there are often powerful strategies to help them reduce their tax liability, often while keeping more of their income and doing significant social good at the same time. Sometimes this means implementing creative charitable planning strategies during life or putting strategies in place that will be set into motion after death.

A note about estate tax…

Under the current tax law, each individual has a $10,000,000 estate tax exemption (adjusted annually for inflation). Married couples can double that amount, passing more than $20 million to their heirs when they die – assuming their estate plan is structured properly. While the vast majority of Americans will never have to worry about that, there are a few things to keep in mind:

  • First, the federal estate tax law enacted in 2017 is set to automatically expire at the end of 2025. Unless Congress extends the law, the estate tax exemption goes back down to $5 million per individual (again adjusted annually for inflation). That will capture a lot of families who currently don’t have to worry about the tax laws.
  • Married couples don’t get to “automatically” double their estate exemption. Planning has to be proactive and intentional to do that. Without intentional planning, you’ll lose some or all of the estate tax exemption when the first spouse dies.
  • Even the very wealthiest individuals don’t pay estate tax if they let us help them. There are creative planning opportunities under the tax code that allow people with even hundreds of millions of dollars in wealth to completely avoid the estate tax. (As we said, the estate tax is VOLUNTARY.)

A final consideration

One of the most important things to remember about strategic tax planning is that you have to maintain your plan as circumstances change. Learn more about how we do that on our planning process page.

Non-U.S. Individuals

With significant changes in international law the United States has become a privacy haven for the world. With a stable, diverse economy and with many other nations now sharing bilateral information (the U.S. doesn’t), many wealthy non-U.S. individual continue to invest in U.S. companies, real estate, and other assets. Others, like professional athletes and entertainers, relish privacy and want to minimize their tax footprint. With strategic planning in advance, we can dramatically reduce the impact of U.S. tax on a family’s global holdings in highly secure, highly private strategies.

Estate Planning for Cyclists & Other Athletes

As a cyclist and an athlete, you know that your sport puts you at special risk. Like you, we spend hours on the road or on trails, seeking solitude and enjoying nature. We know that bad things can happen no matter how prepared we are. That’s why we have a special planning approach for cyclists and other athletes like you.