Family business owners, other high-net-worth families and their advisors, have an opportunity for conversation that can change lives. It’s not really about estate taxes. Trump’s plan to eliminate the estate tax is merely a convenient stimulus for this conversation with your clients.
Will it be repealed? An attorney friend gives this 50/ 50 odds. The way the wind seems to be blowing these days, who the heck knows? The question is no doubt on your mind. But, the discussion around whether it will or will not be repealed serves no true purpose.
In the great scheme of things, estate taxes are unimportant. Most certainly the presence of the tax is beyond our control. We play the cards as they are dealt. Without an estate tax, planning gets easier. With an estate tax, there are plenty of ways to reduce or eliminate your family’s future tax bill. A bit more trouble. Costs some professional fees. But, quite manageable with focus.
The discussions I want to have run deeper. Now that you have created this wealth, what does it mean? What is its purpose? What is your purpose?
The trap you might see playing out over and over with your clients is one of playing out their same programming indefinitely. What do I mean by that? Let’s talk about a typical family business owner/ creator. He or she no doubt had something to prove. Everyone knows the definition of an entrepreneur, right? 30-years-old, flat broke, and they have just been fired! From there, it’s a lot of dirty hard work, risk, sacrifice, fear and more. Most don’t make it, but your client did. Somewhere along the way, this thing called positive cash flow showed up. Their business grew. They tried a lot of different things. Some worked. Some didn’t. On balance, they built something substantial. In the early years,
they were scared, stressed, secretive and suspicious. Along the way they added a state
of constant harassment, a passion for control, success and power.
We all operate on our own programming. The programming that served your client up to this point is probably not the same programming that will best serve them going forward.
I am all for saving estate taxes, having helped pull a few hundred million dollars from the grip of the IRS in my day. But there has to be something bigger than a game with the IRS, with the goal of keeping more for the heirs as the key prize.
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The bigger question—the only real question—is what is supposed to happen next? Let’s stick with the senior generation for now. What is to be their “second half.” By the way, a really good book I recommend is Half-Time by Bob Buford. It’s not about age. It’s about what comes next for them. It’s about the purpose of their wealth and what will bring them joy and fulfillment from today forward!
I am all for saving estate taxes, having helped pull a few hundred million dollars from the grip of the IRS in my day. But there has to be something bigger than a game with the IRS, with the goal of keeping more for their heirs as the key prize.