Financial Planning on the (Possible) Eve of Tax Reform

Tax Reform Status

President Trump’s tax reform proposal mirrors what he promised during his campaign.  With the prospect of major tax reform on the horizon, it is important to stay calm, be proactive, and plan ahead when it comes to your financial planning.

Tax reform has received a lot of press recently.  But it is important to understand that this process is still in its early stages.  When the statutory language has finally been drafted there will inevitably be pushback.  Additionally, as the AALU Washington Report stated in their President Trump Releases Tax Proposals article, “there are political and procedural difficulties with using reconciliation that create additional hurdles, coupled with the costs of reform and new expense priorities, like infrastructure.”  These concerns will potentially result in a difficult path for tax reform – at least in the near-term.

Parts of President Trump’s plan remain unspecified but here is what we know so far:

AALU Washington. (2017, Apr 28). WRMarketplace WRM#17-18. Retrieved from


During this time, clients and Financial Advisors should remain consistent in planning and implement legacy and life insurance plans which will satisfy both practical needs and ensure flexibility.  Other approaches include grantor trusts, estate freezes, grantor retained annuity trusts (GRATs), irrevocable life insurance trusts, (ILITs), and charitable giving.  Financial Advisors and clients should review the timing of gains and deductions, implement current planning strategies, and continue setting groundwork in case this tax proposal progresses.

  • Clients should work with a Financial Advisor to plan and anticipate changes and focus on long-term life insurance and legacy planning for practical advantages. Also, Financial Advisors and clients must review the timing of gains and deductions, implement current planning strategies, and continue to set the groundwork in case this tax proposal progresses.
  • Do not become overly reactive to the intense media coverage on the Trump Tax Blueprint tax reforms.
  • Continue trust planning. Irrevocable trusts including irrevocable life insurance trusts guarantees assets remain outside of a taxable estate even if the estate tax repeal does not happen or remain permanent.
  • Accomplish multiple legacy plan objectives as it is imperative to include life insurance, even with tax uncertainty.
  • Incorporate flexibility into current plans and it will relieve concerns over future tax changes. Also, include flexibility for the return of premium riders especially if they want to cancel the policy, stop paying premiums, reduce policy face amount, etc.  This will allow for planning now without feeling stuck.
  • Use incremental planning. Annual or monthly premium payments are options for clients.  A convertible term policy can be acquired to maintain insurability without impacting flexibility.
  • Plan minimal or no taxable gifts depending on current interest rates for its hurdle rates.
  • Take advantage of low interest rates.

Instead of sitting back and waiting to see where things fall, Executive Benefits Network (EBN)  recommends moving ahead with corporate and personal planning – knowing adjustments will be needed once there is clarity in the tax reform.  There is bound to be more change in the next decade.  During this time of uncertainty, please let EBN know if we can be of any assistance.  We specialize in BOLI, COLI, Executive Benefits Planning, Personal Planning, Estate Planning, and Employee Benefits and we would be happy to further educate and serve you.