McFarland, in fact, is certain Congress will reverse the law well before 2010. "I‚m convinced it‚s just going to stop," he says, noting that spending pressures combined with lagging revenue will be too much for politicians to bear. "I can see them enacting an ‘indefinite postponement.‚ That sells, right?"
That‚s why some estate planners are taking a business-as-usual approach until the future of the estate tax becomes clearer. Gideon Rothschild, a partner and co-chair of the Estate Planning and Wealth Preserva-tion Division of Moses & Singer LLP in New York, says most clients with substantial estates probably won‚t have to be concerned with any changes in the near term. He advises against plans that assume a repeal of the death tax in 2010 and beyond. "That‚s putting blindfolds on," he says. Moses & Singer has a Web site explaining the law at www.mosessinger.com/resources/estate_alert.shtml.
Some married couples, he notes, will want to equalize the assets under each of their names to ensure they use up the maximum exemption amounts allowed under the law. He cites as an example: a husband with $1 million in assets and a wife with $3 million. If the husband were to die in 2004, when the maximum exemption jumps from $1 million to $1.5 million, his estate would not be taking full advantage of the law. Equalizing the amounts is "something you would want to do each year as the exemption increases," he says.
Another concern, despite the tenuous nature of the tax repeal, is A-B Trusts, Daroff says. Commonly used by married couples to reduce the tax on their estates, the trusts typically put an amount equal to the maximum exemption out of the control of a surviving spouse. So as the exemption increases year to year, surviving spouses will lose control of larger and larger amounts of money, he says. For married couples with estates worth about $3 million, that amounts to a sizable loss of control for one of the spouses, he notes. "How much control is the surviving spouse willing to relinquish?" he asks. "I think the clients need to be called back into the office."
But as for planning for when there are no estate taxes, forget about it, Daroff says. Such an endeavor amounts to a guessing game, he and other advisors say. Asks Daroff: "Are your clients planning to cooperate and die in 2010?"
Live Advisors Beat Web Sites When It Comes To Advice
Computers may be able to play chess as well as humans, but their ability to give financial advice may be another matter.
A recent study funded by the Foundation for Financial Planning says "live" advisors beat financial Web sites when it comes to giving consistent and cohesive financial advice. Researchers say people generally offer more consistent advice than interactive Web sites and are better at handling complex financial issues. But the study notes that Web sites generally provide more consistent advice on issues relating to life insurance and Roth IRA conversions. Live advisors were most consistent in the areas of investment and estate tax questions. Web sites seemed more inconsistent as the wealth of clients and the complexity of their issues increased, the researchers say. This was despite the fact that seemingly independent financial Web sites use the same software engines to generate advice.
Deal Allows Goldman Sachs To Reach Masses
Goldman Sachs Group Inc. announced in June that it has agreed to buy investment bank Epoch Partners Inc., bringing the giant firm into partnership with Schwab Institutional and TD Waterhouse. Long known as a firm targeting only institutional clients and ultra-wealthy individuals, Goldman is making a reach for the mass retail market and needs partners to do so.
One noteworthy aspect of the deal is that it will give Goldman Sachs exclusive rights to offer IPOs, other equity products and research to customers and advisory clients of Charles Schwab & Co. and TD Waterhouse, which are among the firms that created Epoch in November 1999.
Goldman Sachs Chairman and CEO Henry M. Paulson Jr. describes the move as the "next step in our strategy to develop new distribution channels by leveraging technology." The purchase price was not disclosed.