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Reflecting On the Present - Succession Planning and Constant Changes in Federal Tax Law

Here it is late January 2013, and I know I am not alone feeling both emotionally and physically tired. The holidays went by like a runaway Power Point presentation. My get-up-and-go has got-up-and-left. Clients that were calling every other day are not to be heard from. They don't want to talk to me, and for a spell the feelings are mutual. With the last minute tax deal which affirmed all the estate tax, gift tax and generation skipping tax credits and exemptions that we were afraid of losing were here to stay for the moment, there is a bit of an empty feeling. There's been some soul searching generating questions such as:

 

  • Why was I not smart enough to forecast that nothing was going to happen and that the tax credits were not going to be lost?
  • We all had our doubts, so why was I not bold enough to tell my clients, "Don't sweat the possible loss of tax credits. Obama does not have the gumption to drop the estate tax credits back to $1,000,000."

 

The good news is that these questions pass as we reconcile that no one was willing to risk the welfare of their clients just to be known as the smartest or most clairvoyant adviser. The assumption is that if the President would cram government run healthcare down the throats of a majority of Americans who did not want it, he would not blink in taking estate and gift tax credits from the "enemy"—the rich. 

Minimally, we can take comfort in knowing that the behavior of politicians is impossible to predict, and that only decent option was to continue to be conservative and try to do the right thing. Although with 20/20 hindsight we can now acknowledge that we did not have to work so frantically. Despite the emotional and physical drain of pushing our clients who were Seeking Succession® to undertake complex strategic gifting, what we did was the right thing. Without exception, what was done was what was needed to be done, we just move up the timing. Sure, there will be some regrets regarding gifts down the road, but that's always the case with strategic transfers integral to business succession. Just as we could not forecast what Congress and the President were going to do, we cannot forecast the outcome of marriages, careers, parent-child relationships, sibling compatibility, etc. Facts are stranger than fiction so nothing surprises me, certainly not a business owner who may for any imaginable reason regret 2012 gifts. Looking back on what transpired with the diversity of clients, I also take comfort knowing that some of the gifts and transfers of business interests would have never happened under normal circumstances. The thought of President Obama taking something back that Bush had provided, the competitive need to keep up with friends who were bragging about their transfers, the pressure from well-informed kids, and certainly yes, the pressure of advisers, no doubt pushed a few clients over the fear-of-gifting line who under less emotional circumstances would have said "hell no!" In response to those Monday morning armchair quarterbacks who would judge the last year as "just a bunch a hubbub about nothing" I would respond with, "Judge the results twenty years from now. The movie's not over so I would not be hasty to conclude that the rush to make strategic transfers before the end of 2012 was not profoundly impactful."


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