"Every election is an opportunity for a national discussion of the issues that affect the entire country, and a chance to collectively address the future," notes
Korzenik was one of three panelists who examined the many ways Election 2016 will impact investors, savers, business owners and retirees. Led by financial reporter and author
What's at Stake for the Next Generation
When it comes to this year's elections, the main issues at stake for those children are education and the means by which families pass along their estates. Throughout the campaign, it has become clear that there are high levels of public dissatisfaction on both of those issues. And so it's possible that a change in the balance of power could have a major impact on education policy and on the taxes families pay when they pass along their estates.
Education, especially the cost of college and the widespread burden of student debt, was a centerpiece of Democratic primary candidate
Although the cost of education hasn't been as much of a focal point for Republican candidate
As the campaign season has progressed, wealth inequality has become less of a hot-button issue. Given the current environment in
"Although both presidential candidates have addressed the estate tax in their platforms, it seems unlikely that there will be significant change to the exemption or rate in the near future," says
Changes on the Horizon
Beyond just the estate tax, there are other concerns for families with a certain degree of wealth. There are several ways that passing wealth to the next generation could become costlier. Intergenerational wealth transfer is always on the radar of elected officials, says Register.
"The estate tax generates less than 1.0% of federal tax revenue, but seemingly small changes to current tax laws or available planning techniques could generate significantly more revenue than the estate tax itself," she says, pointing to
"This is the first time we've heard an elected official put that provision under the microscope in such a public way," Register says. If such a change were implemented, she predicts it could be "bigger than repealing the estate tax in the estate planning world."
As the election has progressed, wealth inequality has become less of an issue, and given the current environment in
More at Stake Than Just Inheritances
For family-owned businesses and the people they employ, the laws relating to passing along an estate are a serious matter, says
A common scenario, Johnson says, is that many of the grown children who stand to inherit family businesses have forged their own paths in life, and don't want to manage the family business. And so the best option for the family may be to sell the business. Whether it's the parents who built the company or the children who have grown up around it who are putting the company up for sale, the decision is an emotional one.
"They are the backbone of their communities, and they all have employees," Johnson says of the ultra-high-net-worth business owners. "When they are selling a business, the biggest concern is usually employees; will they have jobs?"
In these situations, the election creates uncertainty on many fronts. The market for the company is sensitive to a wide range of factors that are directly or indirectly affected by the election. Higher interest rates, a change in corporate taxes, or a downturn in the economy could all make it harder to choose a buyer with the same values as the company's founders.
"You're selling something that your family has put their heart and soul into for decades, you want to get it right," Johnson says. "For many, it is important for these families to craft sales that maintain physical plants in current locations and avoid layoffs."
But the biggest danger that the election poses, whether you're a business owner or an individual with an estate to pass down, is that it can lead to a paralysis when it comes to taking the necessary steps to address the future, says Register.
"I think that uncertainty sometimes prevents people from taking action even when it needs to be taken, whether that's updating an estate plan, or making gifts to family. We know what the laws are now and how to best navigate them now, so I urge anyone with succession-planning concerns to have these conversations with their advisors now."
For more on the potential impacts of Election 2016,
About Fifth Third
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