May 19, 2020

Transferring wealth to the next generation

baby boomers
asset protection
credit protection
David Reinecke
Bizclik Editor
4 min
Transferring wealth to the next generation

In a time when baby-boomers are looking to retire and plan for their future, there are quite a number of options to take when it comes to investing their money wisely. With the stock market a flutter, housing industry still failing, and brick-and-mortar commercial businesses either closing their doors and/or moving their storefronts to the digital age, it can be quite confusing when looking to invest your assets and money without completely losing it all to the market.

David Reinecke is a senior partner with Wisconsin-based Foley & Lardner LLP and is the chair of Foley & Lardner's nationwide Tax & Individual Planning Practice. He is also a member of the firm's Estates & Trusts and Tax & Employee Benefits Practices. With more than 30 years of industry experience, Reinecke counsels and represents individuals and businesses in matters relating to tax and estate planning, business succession planning, marital property planning, the creation and administration of trusts and probate administration.

Reinecke believes that the biggest trend related to estate planning is, as he calls it, having a wealth stewardship mindset. “Clients want to preserve their wealth for their heirs, children and grandchildren and spend most of their time with us dealing with issues to best preserve their assets,” he says. “There is a big population of people who are experiencing losses in their wealth and suddenly get into a preservation mindset. It explains why people swiftly move from risky equity portfolios to low-risk, conservative portfolios. And it’s the same with estate planning.”

“Baby boomers have witnessed at least one person in their life who has gone from riches to rags almost overnight without really doing anything wrong,” he continues. “Credit protection is on everyone’s mind while creditors are taking the wealth out of family pools.”

Because of the baby-boomer generation, there is a substantial amount of people who are moving toward or are already at their retirement age and they have accumulated wealth that they want to start planning for. “People think that our children won’t have it as good as we did, and with that notion, it makes us more materialistic when it comes to watching over their wealth for the following generation,” Reinecke says. “A common theme and mentality is that the next generation won’t be as fortunate in terms of lower taxes and economic prosperity.”

Today, Reinecke’s clients are putting more thought into their trusts and are including detailed descriptions as to how the assets can be deployed in the future. “People are spending time crafting their family wealth mission statements to articulate their values and want their wealth to perpetuate their descendant’s values,” he says. “Our clients want their heirs to experience the joys of higher education and spend a substantial amount of time in the workforce before they can receive any trust funds.”

Reinecke believes that there’s no better time than now to deploy an estate planning wealth strategy when the nation is offering the lowest interest rates for trust recipients. “These sorts of trusts work better in times of low asset values and congress members are changing laws in the next couple of years that would eradicate some of the most effective techniques for moving wealth to other generations with larger taxation,” he says.

Since the real estate sector is still below average value and the stock market is low, it’s better to use estate planning strategies now than to force heirs into higher gift and state tax payments. If estate planning programs aren’t created now while tax rates are low, there may be a risk that people will pay more in taxes to move wealth down to the successive generations.

“The most expensive way to give away your wealth is to die with it,” he says. “Your heirs will pay at least 50 percent of what they’re gaining from your assets with estate taxes. The least expensive way to give away your wealth is to deploy one or more estate planning techniques, such as grantor retained annuity trusts, or GRATs, to transfer your wealth to later generations.”

“We’ll look at your assets, ask for a complete financial profile and make recommendations to discuss your financial objectives,” Reinecke says. “We’ll look for the most efficient ways to achieve your objectives, whether you’re transferring your funds to a spouse, family member, charitable donation, or if you want to protect your assets from creditors or from ending up in the wrong hands during a divorce.”


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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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