BY JON BENSON, VP & DIRECTOR OF BUSINESS DEVELOPMENT
With the Trump administration back in the White House and Republicans controlling both the House and Senate, it is likely the Tax Cuts and Jobs Act (TCJA) of 2017 will continue beyond its scheduled end in 2026 and into the foreseeable future.
This act brought significant tax benefits, such as higher estate tax limits and lower marginal tax rates. As we navigate the evolving tax and financial landscape, it’s important to understand the ongoing benefits and impacts of the TCJA, while also emphasizing the importance of prudent long-term investment strategies and asset protection.
Long-Term Risk-Adjusted Investment Strategy
Regardless of the status of the TCJA, the key principles that drive long-term financial success – investing wisely, utilizing a prudent, long-term risk adjusted investment strategy, diversifying assets, and having a plan – have remained remarkably consistent. These principles are essential for financial stability and growth.
In potentially more volatile times ahead, a risk-adjusted investment strategy becomes even more critical, especially in an interest rate sensitive economy. This strategy involves balancing investments to achieve the highest possible returns while minimizing risk. It includes diversifying across different asset classes, regularly rebalancing portfolios, and being mindful of everchanging market conditions at home and abroad. By adjusting for risk, investors can better navigate market fluctuations and protect their investments in difficult markets.
Utilization of Trusts for Asset Protection
Regardless of the estate tax exclusionary amount that triggered significant activity in the last few years to avoid potential 40% estate tax hits, trusts remain a powerful tool for protecting you from the horror stories of families being torn apart by infighting, divorce, mismanagement, addictions, and other risks. By placing assets in a trust, individuals can ensure that their wealth is distributed according to their wishes, while also providing a safety net for their loved ones. Trusts offer flexibility, control, and privacy, making them an essential component of any comprehensive financial plan.
Importance of Having a Plan
Having a clear financial plan continues to be crucial for ensuring a legacy for future generations. A well-thought-out plan allows individuals to set goals, track progress, address any of life’s changes, and make the best-informed decisions for them and their family. It provides peace of mind, knowing that loved ones will be taken care of, assets will be preserved for future generations, and a lasting legacy will be realized.
The TCJA was a significant event in the world of tax policy and estate planning, but it has not altered the foundation principles of financial planning. By continuing to leverage the benefits of the TCJA, maintaining a long-term, risk-adjusted investment strategy, and utilizing trusts for asset protection, individuals can ensure a secure and prosperous future for themselves and their loved ones.
