In a recent article from Family Wealth Report, Delegate Advisors’ Managing Partner Andy Hart discusses current tax-related proposals in the US, which, if passed, could significantly impact wealthy families when it comes to estate planning.

The biggest impact will be felt from families that have been able to take discounts on the sale of family holding companies, partnerships, or corporations. Currently, selling those assets down to the next generation can be done at significant tax discounts – sometimes as much as 30 to 35 percent. However, the Treasury is proposing regulations to substantially limit or eliminate tax discounts on these types of assets. “That's the biggest proposal that will change the estate planning landscape this year,” Hart said. “Right now, it is hard to make a suggestion about alternative techniques without seeing the language in the new regulations.”

 Wealthy families will also find cause for concern from other proposals in Obama’s 2016 budget. Carried interest – additional earnings on returns that private equity and hedge fund managers provide investors – is currently taxed at the capital gains rate, 20%. A proposal to tax carried interest at the ordinary income tax rate, 39.6% for the highest brackets, would have a significant impact on some of the wealthiest earners in the US.

“Brand new territory,” Hart further explains, is a 28% taxation of estate capital gains upon gift or death. Currently, assets are subject to estate tax upon death, which reflects fair market value. “But this new tax would result in the imposition of both income taxes (capital gains) and estate taxes on all appreciated assets – a massive new tax,” Hart said.


Most attorneys we speak to believe much of what Obama proposes will never make it into law. Still, the proposals would have a major effect on our clients, so it’s something we are watching all the time.

To read the full article, click here.