By Carma D. McCallie, JD

BBT-Perspectives-Planning-Through-Uncertainty-feature

In 1789, Benjamin Franklin wrote a letter proclaiming “. . . in this world nothing can be said to be certain, except death and taxes.” And although taxes do seem to be a certainty, both the type of taxes and amount we pay change frequently under the United States tax code.

Just in the last 20 years, we have seen several major tax bills authored in Washington – some of which have passed and many of which have not. This past year has been particularly uncertain, as we watched two candidates with very opposing views on taxes campaign for office, and little progress has been made on a new tax bill since President Trump took office in January.

What’s Going to Happen?

The current administration has made proposals to eliminate some taxes, such as estate tax, and lower income tax rates for many taxpayers. However, with few details included in the proposals, it is difficult to gauge the impact – or even the likelihood – they will occur. At least publicly, it does not appear the current Congress has been able to reach a consensus on tax proposals yet, either between the parties or with the president. Therefore, regardless of your political affiliation the message seems clear: we just do not know what changes will occur with taxes in the next few years – if anything.

This uncertainty can make it very difficult to know how to plan for our future and the future of our families and businesses. Many are hesitant to move forward with planning choices they see as irrevocable for fear of making the wrong choice. This “wait-and-see” or “do-nothing” approach could prove disastrous if it results in not implementing the proper planning at the right time.

Taxes are typically just one of the reasons we do planning for our businesses and ourselves. Other motives for planning are our desires to leave a legacy to our children and grandchildren, transition a business to a new owner or owners in an orderly fashion and adequately care for our families. With these reasons, planning needs are constant and core to accomplishing our goals. We cannot allow the uncertainty regarding tax law to stop us from addressing them.

So, What Do We Do?

Simply put, we do not shy away from tax uncertainty, and we continue to plan. In the past, tax planning often took center stage when meeting with your advisor. By using the time-tested model of planning, we can focus on two different and important aspects to help you achieve your legacy aspirations:

  1. Identifying and solving for your goals
  2. Building flexibility into the plan so you can adjust it to reflect changes in both laws and circumstances down the road

The most important part of planning involves identifying and addressing what is at the heart of what you wish to accomplish. That answer rarely involves taxes. So, putting taxes aside for a moment, ask yourself, “What do I really want to do with what I have?”

For example:

  • Do you want to ensure your children will be able to attend the college of their choice?
  • Do you want to leave a legacy to your favorite charity?
  • Do you want to make sure your spouse does not have to worry about operating your business if you cannot?

These examples combine with a world of other ideas and concerns to form your planning goals. Once we have identified those goals, a discussion is still needed about the impact of income, estate, gift and generation skipping transfer taxes.

Planning for Change

BBT-Perspectives-Planning-Through-Uncertainty-1Tax professionals will often tell you to plan for the law as it stands today, and today’s law is certain. By integrating what we know to be the current law with flexible planning techniques to address possible future changes in tax law, we can develop a comprehensive estate or business plan that gives you confidence your goals have been addressed and you have the flexibility to pivot if changes occur.

Your advisor can recommend many ways to keep your plan dynamic rather than static. Change will come – perhaps that is another certainty Benjamin Franklin should have mentioned. Changes in the law and changes in circumstances cannot always be predicted, but we can be prepared for those changes with a plan to handle whatever comes our way.

By Carma D. McCallie, JD

BBT-Perspectives-Planning-Through-Uncertainty-feature

In 1789, Benjamin Franklin wrote a letter proclaiming “. . . in this world nothing can be said to be certain, except death and taxes.” And although taxes do seem to be a certainty, both the type of taxes and amount we pay change frequently under the United States tax code.

Just in the last 20 years, we have seen several major tax bills authored in Washington – some of which have passed and many of which have not. This past year has been particularly uncertain, as we watched two candidates with very opposing views on taxes campaign for office, and little progress has been made on a new tax bill since President Trump took office in January.

What’s Going to Happen?

The current administration has made proposals to eliminate some taxes, such as estate tax, and lower income tax rates for many taxpayers. However, with few details included in the proposals, it is difficult to gauge the impact – or even the likelihood – they will occur. At least publicly, it does not appear the current Congress has been able to reach a consensus on tax proposals yet, either between the parties or with the president. Therefore, regardless of your political affiliation the message seems clear: we just do not know what changes will occur with taxes in the next few years – if anything.

This uncertainty can make it very difficult to know how to plan for our future and the future of our families and businesses. Many are hesitant to move forward with planning choices they see as irrevocable for fear of making the wrong choice. This “wait-and-see” or “do-nothing” approach could prove disastrous if it results in not implementing the proper planning at the right time.

Taxes are typically just one of the reasons we do planning for our businesses and ourselves. Other motives for planning are our desires to leave a legacy to our children and grandchildren, transition a business to a new owner or owners in an orderly fashion and adequately care for our families. With these reasons, planning needs are constant and core to accomplishing our goals. We cannot allow the uncertainty regarding tax law to stop us from addressing them.

So, What Do We Do?

Simply put, we do not shy away from tax uncertainty, and we continue to plan. In the past, tax planning often took center stage when meeting with your advisor. By using the time-tested model of planning, we can focus on two different and important aspects to help you achieve your legacy aspirations:

  1. Identifying and solving for your goals
  2. Building flexibility into the plan so you can adjust it to reflect changes in both laws and circumstances down the road

The most important part of planning involves identifying and addressing what is at the heart of what you wish to accomplish. That answer rarely involves taxes. So, putting taxes aside for a moment, ask yourself, “What do I really want to do with what I have?”

For example:

  • Do you want to ensure your children will be able to attend the college of their choice?
  • Do you want to leave a legacy to your favorite charity?
  • Do you want to make sure your spouse does not have to worry about operating your business if you cannot?

These examples combine with a world of other ideas and concerns to form your planning goals. Once we have identified those goals, a discussion is still needed about the impact of income, estate, gift and generation skipping transfer taxes.

Planning for Change

Tax professionals will often tell you to plan for the law as it stands today, and today’s law is certain. By integrating what we know to be the current law with flexible planning techniques to address possible future changes in tax law, we can develop a comprehensive estate or business plan that gives you confidence your goals have been addressed and you have the flexibility to pivot if changes occur.

Your advisor can recommend many ways to keep your plan dynamic rather than static. Change will come – perhaps that is another certainty Benjamin Franklin should have mentioned. Changes in the law and changes in circumstances cannot always be predicted, but we can be prepared for those changes with a plan to handle whatever comes our way.

BBT-Perspectives-Planning-Through-Uncertainty-1

About the Author

Carma McCallie, J.D.

Carma McCallie, J.D.

Director of Advanced Markets BB&T Life Insurance Services

Carma specializes in complex estate, business and charitable planning strategies involving life insurance. She has more than 20 years of experience in the estate and business planning arena. Carma received her bachelor’s degree from West Georgia University and her law degree from Georgia State University College of Law.