Is Failing To Warn Clients Of Tax Hikes A Breach?


Whether you sell advice as a financial planner, wealth manager, or family office professional, you arguably owe a duty to advise clients on taxation as well as investments. This year, with the election results likely to be delayed, clients are likely to have six weeks or less to act on family inheritance decisions requiring legal as well as financial counsel. Writing trust documents, creating S corps, and other legal actions will be required after modelling a range of after-tax income and estate projections.

You don’t need to be a political expert to know that, with Florida turning blue in the latest polls, cap gains taxes are expected to just about double from 20%, and the estate tax exemption will be slashed in half from $11.58 per person, requiring action by the end of the year on installment sales of property, implementing life insurance trusts, and an array of other complicated tax techniques in the last few weeks of the year, when Thanksgiving, Christmas and Chanukah and other major holidays will leave even less time to get things done.

Failing to proactively reach clients affected by these likely changes  increases liability exposure and is like shooting yourself in the foot.   

A CIMA®, CFA®, CFP®, or CPA advising a client with more than $5.79 million in assets or who earns more than $400,000 annually who fails to inform them that higher gift, estate and income taxes are likely to adversely affect them unless they act by the end