Several tax policies that are likely to take place under the Biden administration will impact the tax payments of wealthy individuals and high income earners. While it is difficult to quantify the impact of the potential tax changes, there is no doubt that now more than ever, tax planning will prove essential for any business.
Keeping abreast of ever-changing tax policies is necessary, but when there are different changes to consider, the tax plan that business owners need this year is best left to the expertise of financial advisers or wealth managers. Moreover, the IRS annually adjusts the taxable income bracket in consideration of the rate of inflation for the year. That is why for the year 2021, the top tax rate of 37% will apply to the amount of taxable income that exceeds $523,000 for single taxpayers, or $628,300 married taxpayers filing jointly.
If the Biden administration’s proposed tax change pushes through, that highest tax rate of 37% will revert to 39.60%, the tax rate prior to the “tax-cut law” enacted by ex-president Trump. Actually, there are several other changes that financial advisers anticipate in behalf of their clients. Mainly because early adoption of financial strategies are critical in developing tax plans for the year 2021.
However, when looking for a financial adviser or wealth manager to handle not only your business but also your personal investments and other assets, don’t limit your choices to high profile wealth management companies.
Customization is Key to Effective Financial Planning
Keep in mind that every tax plan must be customized according to the type of business from which the taxable income will be generated. That is regardless of your net worth. Consider the fact that while large wealth management firms have a stable of wealth managers or financial advisers under their employ, not all have the expertise of the top honchos running the firm. The wealth managers with high-caliber expertise will be focused on strategizing and planning the portfolios of high net worth and ultra-high net worth clients.
If your business or your net worth is in the small to medium scale level, a big named wealth management firm may agree to handle your asset portfolio, but will likely relegate your account to one of the junior financial advisers. Still, many try to avoid that kind of scenario by setting a minimum net worth value as requirement, when contracting for financial planning services.
Mainly because financial planning should be flexible rather than conventional, while financial strategies require different tools for analysis and additional services in order to arrive at the best fit for each client. More so now that now that numerous changes are about to transpire, not only for tax rates but also in tax incentives as well.
Nonetheless, if you are reading this because you are researching for guidelines on how to choose the best financial advisor, checkout the wealth of advice given by Pillar Wealth Management via ”The Ultimate Guide To Choosing the Best Financial Advisor” book.