Katharine George, CFP®, AEP®

How will the potential decrease of the federal estate tax exemption affect your personal financial plans?

Many people use Donor Advised Funds (DAFs) for tax-efficient charitable giving during their lifetime. See our article here on what a Donor Advised Fund is, and how it can improve efficiency and reduce taxes for charitably inclined individuals.

When it comes to estate planning, our discussions with clients typically revolve around the Federal estate. Our clients are less aware of the careful planning and consideration needed to address their estate tax on the state level. For instance, as of 2022, 12 states and the District of Columbia levy estate taxes on estates over a certain value – and New York is one of them.

Interest rates are at historically low levels, which means right now is an opportune time for you to use certain estate planning strategies. If you have a large estate, you can take advantage of the current low interest rate environment to shrink your future estate-tax liabilities.

Your relationship with your financial advisor should be grounded in trust, competence, and mutual interest. As an investor, your expectations are that your wealth management firm offers the sort of guidance that delivers you the best possible outcome—even if that outcome means they receive fewer commissions or fees.

Did my investments do well? Many investors look at the unrealized gain/loss on their brokerage statements and believe this is an indication of the return on their investment.