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Tax Law Creates Challenges and Opportunities for FAs

January 19, 2018

The Republican tax overhaul is going to make advisors’ jobs complicated — but because of the changes, they’re also likely to see an uptick in demand for their services, InvestmentNews writes.

Planning long-term will be a challenge because almost all of the provisions adopted into the new tax law expire in 2025, according to the publication. Moreover, if Democrats regain power, yet more changes to the tax law could happen as soon as 2020, InvestmentNews writes. But advisors need to start talking to their clients now about their tax planning and asset protection, according to the publication — particularly because many provisions are likely to be grandfathered, Steven Siegel of consulting firm the Siegel Group, tells InvestmentNews.

But the flip side of the coin is almost every single provision passed will sunset in 2025 — and that situation should boost at least the short-term demand for financial advisors, Dominick Schirripa writes in InvestmentNews.

In particular, advisors should pay attention to the doubling of exemptions in estate, gift and generation-skipping taxes, the changes to the treatment of pass-through income and changes to technical partnership terminations, according to Schirripa, managing editor for Estates, Gifts & Trusts at Bloomberg Tax.

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Among other provisions likely to affect advice clients are the creation of qualified opportunity zones, which offer tax incentives for investments in low-income communities, and changes to compensation and savings provisions, he writes. Under the new law, performance-based compensation and commissions over $1 million are no longer exempt from the $1 million deduction limit for compensation of employees, which could affect how executives are compensated in the future, according to Schirripa.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.