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Kevin Swanson in Family Wealth Report: Why Tax Increases Should Not Dictate Wealth Plans

Despite the strong likelihood that taxes will increase for wealthy families, taxes should not be the dominant factor when creating estate, wealth transfer and investment plans. To learn more about why tax burden increases should not dictate your finances, Family Wealth Report recently spoke with Potential Wealth CEO, Private Wealth Advisor and LPL Registered Principal Kevin Swanson for insight.   

“Some of the Democratic senators like Bernie Sanders have put forth a bill to change the estate tax exclusion to $3.7 million and potentially increase the estate tax from the current 18 percent to 40 percent,” Swanson tells the publication. “Effective wealth transfer strategies will now need to be considered by more Americans than ever.”

However, regardless of whether tax hikes occur under the Biden administration or a future one, Swanson believes that taxes should not interfere with how wealthy families invest. “A mistake is in allowing the tax tail to wag the dog,” he explains.

Swanson also warns about the potential pitfalls of quickly moving assets to avoid potential increases in tax rates. “My concern is that people are so worried about avoiding taxes they are not taking proper time to properly plan a move,” he says. “These tax strategies should be done in cooperating with their tax professional and financial advisor at minimum before taking action.”

For example, when creating a wealth transfer plan, instead of focusing solely on tax-efficiency, Swanson says that it is also important for families to consider durable power of attorney, medical directives and that the wealth holders’ children and grandchildren understand the family’s values.

“We have found it helpful to sit with clients and go through plans, in a workshop, to explore what impact in the world they want to have with their money. Then we can talk about which vehicle is the best one to manage that [specific goal],” explains Swanson.

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