In the wake of the new law, Rick Kahler, CFP, owner of Kahler Financial Group, received some questions that stunned him.
“I had two clients ask me if I would start charging commissions so they can deduct them pretax,” he said. “I am fee-only, and my fees are no longer deductible. Both of their accountants suggested it, and they are my biggest clients — a little frightening,” Kahler added.
He declined the requests.
For his part, Scott Bishop, CFP and partner with STA Wealth Management, had to run interference on two significant client moves.
The first instance involved an irrevocable life insurance trust set up a few years ago for a client with a net worth of $15 million, to help in the ultimate payment of estate taxes.
“He called me, adamant, to cancel the policy now that he would no longer owe the tax due to the higher death tax or unified credit, now at $22 million,” said Bishop, who advised the client that it was only a temporary hike and that the old law would revert back in 2026.
“Although I had put that in my newsletter, he selectively read it and saw ‘no need for estate-planning life insurance,'” Bishop added. “I told him that we could look at other strategies in terms of gifting, or charitable strategies that we could take advantage of in the interim, but that he should not cancel the life insurance until we coordinate it with his overall financial and estate plan.”