Using Financial Modeling to Illustrate Estate Planning Techniques
When discussing estate planning strategies with clients, it is imperative to discuss the benefits of planning versus not planning. Sometimes the benefits can be showcased with an easy example or two, as when discussing the use of the lifetime exemption to make taxable gifts with no gift tax. Other times it takes a more complex analysis involving financial modeling to determine if the proposed plan is appropriate for the client’s financial situation. This can involve the use of spreadsheets or illustrations to communicate the gift and estate tax benefits of a proposed planning technique. Often, just setting forth the results fails to communicate the impact of all the factors that impact the plan.
In addition to explaining the gift and estate tax benefits of a proposed planning technique, an important objective of financial modeling is to communicate how these tax benefits work in an understandable manner. If a client understands the technique, they can become involved in the design of the estate plan and help make decisions on how much to “give away.” Illustrating the estate and gift tax savings of a particular technique is not overly complicated. However, an important part of any estate plan is to make sure that the client does not run out of assets later in life.
Through the use of financial modeling the common techniques used by estate planners can be illustrated in a way that allows the client to understand the factors that influence the shift of wealth to future generations without exposure to estate and gift tax, and the impact these factors have on the client’s retained assets that will be needed to support the clients for the remainder of their lives. If a client can understand or at least have a clear picture of the financial impact of the estate plan, the question of “Am I giving away too much?” that often holds up many estate plans, can be eliminated.
These materials will discuss the factors involved in an estate tax plan, provide illustrations to illustrate the estate tax plan and the impact it will have on the client’s retained assets, including the impact of the client’s obligation to pay income taxes on the grantor trust’s income (the “Grantor Trust Burn”), which are used in most estate tax planning situations, and discuss what can be done to eliminate the financial hardship caused by the Grantor Trust Burn.
Modeling strategies not only provide tangible numerical data for clients, but often provide deep insights into the strategies we propose. These materials will use financial modeling to highlight a few of those insights and hopefully provide readers with practical planning tips to help their clients make better decisions around their planning, and make decisions that align more closely with their client’s spending needs and financial goals.
About the Speaker:
Brandon Ketron, CPA, J.D., LL.M., is a partner at Gassman, Denicolo & Ketron, P.A. in Clearwater, Florida, where he focuses on Estate Planning, Tax, and Corporate and Business Law. He also plays a key role in developing EstateView software a web-based estate planning platform designed for wealth advisors, attorneys, CPAs and other professional serving high net worth clients. Brandon regularly contributes to Steve Leimberg's Estate Planning and Asset Protection Planning Newsletters and hosts webinars for both clients and professionals on estate and estate tax planning topics.
He earned his law degree, cum laude, from Stetson University College of Law, and completed his LL.M. in Taxation at the University of Florida. Brandon received his undergraduate degree in Business Administration from Roanoke College, graduating cum laude with concentrations in Accounting and Finance. He was recently inducted into the Roanoke Athletic Hall of Fame and is proud to be a member. Additionally, Brandon is a licensed CPA in Florida. You can reach him by email at brandon@gassmanpa.com.
