A short sighted position in my view (Opinion post)

Aug 20, 2019 | Jeremy Goldfarb


Throughout my career, I have seen a number of financial and tax planning structures driven out of existence for a plethora (I love that word) of reasons. The fundamental rationale behind changes to the law regarding tax and financial planning, is a perceived leveling of the playing field for all of mankind, or at least, country-kind. Over the years, there have been attempts to circumvent the tax system with cockamamie schemes such as over funding and insurance policy (see 10-8 strategy), or improper classification of income and expenses, however the overwhelming majority of tax planning is born through proper interpretation of tax law, and in an effort to maintain one's overall wealth, while still maintaining one's social responsibility. I point to charitable giving and tax credits as an example of this, but yet that still comes under attack. Get rid of the tax credits, and see how quickly things crumble in the world of charitable giving.


I read an article this morning in the post, and felt the same way as I do with attacks on charitable giving tax credits. ESTATE FREEZES as a part of estate planning are well thought out, and legitimate means of extending family wealth from one generation to the next. The writer waxes poetic about how taxes on the rich can be fleeting, so why not target an already existing problem in the tax system. The issue with the writer's position, is that it is very short sighted. Estate Freezes allow family wealth to eclipse only one generation, and ultimately, taxes are paid (assets are deemed disposed) on the present day value as of the freeze. While the future value is allowed to build and pass tax free to the next generation, a tax bill ultimately gets paid at some point in the future either through ongoing consumption, or on the death of the next generation. In conjunction with that, you arm the public with investment capital in the future as opposed to handing it over to the government. I would much rather have investment or consumption capital in the hands of the most irresponsible trust fund child, than in the hands of government. Line up the track record between the two (in terms of waste), and the performance delta is not all that dissimilar. I'll take my chances on the public.......


If you haven't considered an estate freeze or some variation of that for your future planning.....you should.