The Great Recession and recent politics significantly changed the behavior of those who own wealth and their advisors. The property rights fight for my clients is trench warfare. In trench warfare, troops are dug in and protected from enemy fire giving the defender an advantage. Wealth owners must now be much more careful about how they deploy assets. Business owners have greatly reduced the risk they take when hiring employees or expanding operations because of tax and regulatory uncertainty.
The new estate tax law was a clear victory for small business owners and the moderately wealthy. Obamacare, for example, was a clear defeat. The moderately wealthy are now much more risk adverse. They are digging economic and legal trenches to protect wealth from attack.
My legal advice to clients changed radically because of the new estate tax law and the economic downturn. Prior to the new estate tax law, almost all clients with reasonable wealth needed to plan in order to minimize estate tax. All that changed when congress set the exemption to over $5 million. Now, the focus is not on estate tax marital formulas, now it’s about important stuff – protecting family wealth and management after death or disability.