More On Legal & Compliancefrom The Advisor's Professional Library
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
Senators Blanche Lincoln (D-Arkansas) and Jon Kyl (R-Arizona) introduced July 14 a proposal to permanently reform the federal estate tax. The proposal would require the Senate Finance Committee to amend H.R. 5297, the Small Business Lending Fund Act of 2010, to permanently set the estate tax rate at 35%, with a $5 million exemption amount phased in over 10 years and indexed for inflation. It would also provide a "stepped up basis" for inherited assets.
The Lincoln-Kyl proposal also instructs the Senate Finance Committee to offset the difference in revenue loss between the Obama Administration's proposed 45% estate tax rate with a $3.5 million exemption amount and their proposed reform. The estate tax temporarily expired this year, but if Congress does not act this year, the federal estate tax is scheduled to jump to 55% with only a $1 million exemption at the beginning of 2011.
The small business lending bill passed the House in June, but the Senate pulled the bill from debate in mid July due to procedural delays. A spokesperson for Lincoln's office says that the Senate may bring the bill, and the estate tax issue, up for a final vote "shortly after" Congress's month-long August recess, but other congressional staffers have suggested the vote could come before the Senate adjourns for its recess on August 7.
"If the Small Business Lending bill is intended to help small business create jobs, wouldn't it make sense to provide small business owners with the certainty that their tax rates aren't going to skyrocket at the beginning of next year?" said Kyl in a statement. "In just six short months, American taxpayers will face the largest tax hike in history unless Congress acts. It is estimated that more than a half million American families will pay the estate tax over the next decade, and the lack of congressional action creates a tremendous amount of uncertainty for these families, small-business owners, and farmers. This uncertainty is one of several factors acting to prevent a strong economic recovery from taking hold."