This Month's Harvest:
THE BBB OVERVIEW
[ Advisors Edition ]
Hello, skim this information once and you’ll know exactly which clients to call first.
The new One Big Beautiful Bill is packed with tax, retirement, and estate planning changes. But let’s be honest—no one has time for a 20-page summary. The Harvest newsletter is designed for speed: a 60-second read organized by client type. Instead of a laundry list of provisions, you’ll see exactly which clients are most affected, why it matters, and what you can do next. Use it as a quick filter: if you recognize your client in a category, you’ll know right away where the opportunities—and the risks—are.
1) High-Net-Worth Individuals & Families:
The $15M/$30M estate, gift, and GST exemptions mean advisors will be structuring larger, more complex transfers. A corporate trustee is essential when:
- Assets are split between trusts (dynasty, SLATs, GST trusts) to maximize exemptions.
- Family governance requires neutrality (siblings/children as beneficiaries).
- Beneficiaries live in multiple states and want privacy, asset protection, and continuity.
South Dakota’s directed trust framework (administrative-only corporate trustee + advisor retained in seat) enables the financial advisor to maintain control over investment management, while the trustee handles distributions, record-keeping, and tax filings.
Advisor Action Points:
- Re-evaluate irrevocable trust structures: could higher exemptions fund new trusts administered by a corporate trustee for better control and protection?
- Discuss with families whether neutral administration (corporate trustee vs. sibling/friend) avoids long-term conflict once more wealth moves into trusts.
2) Business Owners & Entrepreneurs:
Many will take advantage of permanent lower tax brackets and full expensing to grow and transfer business wealth. Business succession often involves closely held shares—an area where a neutral, administrative-only trustee:
- Manages trust compliance while allowing the advisor to continue managing liquidity strategies.
- Provides structure around buy-sell agreements, redemptions, or staged gifting of ownership.
- Avoids family disputes when multiple children (some active, some inactive in the business) are beneficiaries.
South Dakota’s trust statutes provide entrepreneurs with flexibility, allowing them to adapt succession plans as laws or business needs change through decanting, trust protectors, and directed structures.
Action Points (Advisor-facing):
- When succession planning, suggest placing closely held shares into a directed trust with a corporate trustee—this separates governance from family dynamics and preserves continuity.
- Use trusts as vehicles to fund buy-sell agreements or hold business real estate, administered by a neutral trustee.
- Position the corporate trustee as the continuity solution: when founders retire or pass away, the trust doesn’t lapse into family conflict—the trustee ensures the plan is carried out.
3) Retirees & Older Clients:
“Senior Deduction” could practically eliminate taxes on Social Security for many. With healthcare and secure income being top concerns, tax relief is meaningful—but temporary.
Action points:
- Estimate clients’ tax scenarios post deduction.
- Evaluate timing of RMDs and Roth conversion considerations, given uncertainty around future RMD expansion
- Plan near-term moves while deductions remain active (through 2028).
4) Families with Children:
New child-focused savings opportunities have emerged, offering greater flexibility in education and legacy savings.
Action points:
- Set up Trump Accounts for eligible children.
- Revisit and expand the use of 529 plans for broader educational needs.
- Adjust education saving plans, leveraging the child tax credit and new tools.
5) Middle- and Upper-Middle Income Families:
Temporary deductions, such as tips, overtime, and auto loan interest, can be used to alleviate taxes through 2028. These are behaviors many clients already engage in.
Action points:
- Incorporate these new deductions into tax projections.
- Encourage documentation of qualifying overtime and tip income.
- Consider buying an eligible car if you plan to make an auto purchase and want to secure a tax deduction.
