Advisor Tax Mistake #3 – Skipping the Three Most Important (But Least Sexy) Tax Strategies

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives

This article is the fifth in a series of the seven most-common mistakes financial advisors make on tax planning with clients

When it comes to financial advisors and tax strategies, they often sound like old fishermen telling the story of “the one that got away,” except the stories are about ultra-obscure tax strategies that they have never used. This tendency to tell stories about the tax strategies that got away is so prolific that anytime an advisor approaches me about a tax scenario, I immediately ask for the name of the client to ensure we are talking about real life versus tax fantasyland.

All this excitement around exotic tax strategies often causes advisors to make the mistake of ignoring the basics in hopes they will finally, someday have a chance to implement an intentionally defective grantor trust using multiple discounted family LLCs, while claiming residency in Puerto Rico and owning all their assets inside of a private placement life insurance policy that is placed inside a spousal lifetime access trust (SLAT).

For the 99% of advisors and their clients who will never need such planning, I want to draw your focus to the three most important, yet boring, tax strategies that every advisor should be discussing with every client. Warning: I know you already know these, but before you click to the next article, remember that you also know how to get six-pack abs and earn a billion dollars. In other words, this isn’t about what you know; only what you do counts.