by Zero Hedge TUESDAY, DEC 22, 2020 – 19:05
One of the big reasons for the market’s post-election rally is that because Republicans actually did much better than many expected in congressional races, eliminating the threat of a major tax hike. The results – which saw Democrats lose seats in the House and fail to win a majority in the Senate – suggested Biden would be unable to fulfill campaign promises to raise trillions of dollars in new revenue from the wealthy. And yet, it is these same rich who are now scrambling to make large transactions before the end of the month according to Bloomberg, as they try to get ahead of moves next year by Joe Biden and Democrats in Congress to raise taxes or close loopholes.
To be sure, looking at the latest PredictIt odds for a Democratic sweep in the GA runoffs should make the case for higher takes even more remote: after hitting a post-election high in the low-30s, the odds have dipped to a 2 week low.
Yet rich people, perhaps having learned from previous polling fiascos, aren’t taking chances and as Bloomberg reports, some financial advisors say they’re busier than ever in the last weeks of 2020, especially with helping clients transfer wealth to the next generation tax-free while they still can.
Meanwhile, appraisers who are crucial for valuing assets used in these estate planning strategies, “have been inundated.” According to the report, requests for property appraisals have quadrupled at New York firm Miller Samuel Inc., President Jonathan Miller said. By late November, he had to start turning away clients.
“We physically can’t handle all the year-end deadlines at this point,” Miller said. “We started doing this after the Thanksgiving holiday and it’s been extremely frustrating.”
To be sure, while a wholesale rollback of Trump tax cuts is unlikely , tax changes are still possible in 2021, and the Biden administration could also try to close the many loopholes that make the U.S. estate and gift tax easy to avoid. “I can see a situation where Treasury issues regulations that make it more difficult to do effective estate planning,” Berger said.
The estate tax is especially sensitive: as part of Trump’s tax law, the amount the wealthy could pass to heirs without paying the estate and gift tax was doubled to $11.58 million for individuals and $23.16 million for couples this year. That and other provisions of the law expire in 2026, giving the rich another reason to make moves sooner rather than later.
Before the election, “so many clients had already started looking at gifting strategies,” said Lisa Featherngill, head of legacy and wealth planning at Abbot Downing, a unit of San Francisco-based Wells Fargo & Co. “We’re telling them don’t take your foot off the gas.”
The reason for the rush to get affairs in order before year end is the threat that tax changes under Biden could be retroactive to the beginning of 2021 even though many advisers are now telling clients that seems less likely, with tax hikes occurring in 2022 if they happen at all.
Even so, Laura Zwicker, chair of the private client services group at Los Angeles law firm Greenberg Glusker, told Bloomberg said she’s busier “than I have ever been” with a surprising number of new clients coming in the weeks after the election looking to finish transactions this year.