High-Net-Worth Clients Maintain Status Quo Despite Estate Tax Repeal
Instead of allaying peoples concerns over estate taxes, the recent debate over and approval of a 10-year repeal seems to have had the opposite effect, says Walter Zultowski. More people with a high net worth are interested in protecting their wealth now than before the debate over repeal became national news, he says.
The senior vice president of marketing and market research for Phoenix Life Insurance Company, Hartford, Conn., says the debate over the repeal has people who had never considered themselves “high-net-worth” taking steps to protect their wealth against a tax they now realize could very well affect them.
Under the recently passed tax bill, the estate tax is scheduled to gradually decrease until Jan. 1, 2010, when it is set to terminate. It returns as it exists today on Jan. 1, 2011.
“Many high-net-worth people were unaware of the benefits of estate planning until debate over repeal of the estate tax over the next 10 years ensued,” Zultowski says. “Because of the discussion, many more of them feel they need to be educated on the issue. Many indicated [in a survey] that they plan to consult an advisor.
“If my suspicion is correct, there is a group of people out there who are aware of [the estate tax] now, but dont know where to turn, or even if it applies to them. Its a chance for advisors to do some basic education relative to estate planning with their clients.”
Even people who already have an estate plan in place, for the most part, do not plan to make significant changes in light of the repeal, according to early results of the 2001 Phoenix Wealth Management Survey.
“This group is knowledgeable about the tax law changes, but they are not responding with dramatic changes in their estate plan,” Zultowski says. “In fact, fewer than 5% said they anticipate dropping life insurance, terminating one or more trusts, decreasing gifting to children and charities, or changing business succession plans in light of the new law.”