Filed Under:Life Insurance, Life Planning Strategies

Expert foresees end-of-year rush to implement tax avoidance strategies

Photo credit: Renjith Krishnan
Photo credit: Renjith Krishnan

Whatever compromises President Obama and a divided Congress agree on to avert the pending fiscal cliff and reform the current loophole-ridden tax code, taxes on wealthy Americans are certain to rise next year. That means that life insurance and financial service professionals need to approach their clients before year-end about leveraging a host of tax-avoidance strategies.

So said, Andrew Friedman, principal of the Washington Update LLC, during a Nov. 8 webcast for the investment community hosted by Sammons Retirement Solutions. Because of likely increases in taxes to be paid on income, investments, estates and charitable gifts, he said, the high net worth would do well to take advantage of still low tax rates available through year-end.

Assuming the Bush tax cuts for these households expire, they'll be paying an effective income tax rate of 44 percent, up from 35 percent currently. These income earners will also pay a capital gains tax of 24 percent, up from the current 15 percent, and a dividends tax approaching 44 percent, up from 15 percent.

Also for the affluent to consider: The year-end expiration of the $5.1 million gift and estate exemptions. Absent Congressional action, the estate tax regime will revert to a $1 million applicable exclusion amount and a top tax rate of 55 percent (up from 35 percent currently), as existed before passage of the Economic Growth and Tax Relief Reconciliation Act of 2001.

Featured Video

Most Recent Videos

Prospects not listening to voice mail? Arrange a phone date


Redesigning your phone life is more important than finding the “best words” for a voice mail in today’s culture.

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.