Eoin Treacy's view

I was in Las Vegas yesterday to attend my first board meeting as a director of the Nevada Trust Company and thought I would repost this piece I wrote notifying subscribers of this development from March 4th..  

I don’t generally comment on politics but on this occasion I’m going to make an exception. It is looking increasingly likely that the next President of the USA is going to be either Hillary Clinton or Donald Trump. On first blush they appear to be about as opposite to one another as is possible, yet they share one important characteristic.

They both propose to close tax loopholes in order to fund their respective projects. For Clinton that would be to fund free third level education at state schools. For Trump it would be to rejig the tax bands. Regardless of which side of the political chasm one resides those on high incomes but particularly those with a lot of assets are most likely to be affected. Considering how large the gulf is between taxes received and the unfunded liabilities of Social Security and Medicare, some form of higher taxes is inevitable.  

These articles from Politico, Bloomberg and the Brookings Institute may also be of interest. 

The biggest target is likely to be the $5.45 million exclusion for individuals or $10,9 million for couples. Considering that the baby boomers are going to be leaving substantial sums to their offspring in the form of cash and property this is a likely to be a topic that focuses attention in the coming months. 

When I migrated to the US I soon realised how complex the system is. If there was one reform that could generate economic growth it would be to simplify it. I was inspired to get some education when the IRS audited my 2014 tax return because my moving expenses fell outside its norms.  Thankfully it proved a storm in a teacup but I didn’t feel like being accosted again so I enrolled in UCLA Extension’s accelerated personal financial program. 

I took courses in financial planning, insurance, investment planning, income tax planning, retirement planning and estate planning. As a neophyte in the USA’s tax structure I initially felt overwhelmed at how to best structure my affairs but I soon learned some important information. 

Silicon Valley isn’t the only place investing in data mining. The IRS has developed propriety algorithms to spot aberrant behaviour. If you are within the norms you are less likely to be audited. If you fall outside the standard deviation you are more likely to be audited. 

This article from Forbes highlights how 1 in 10 people with $1 million incomes were audited last year. Since you get a three-year grace period following an audit that means if you have fall within those income levels you can basically count on being audited. 

I soon learned that trusts and other advanced frameworks are the solution to the issues of tax, litigation and estate planning I had been looking for. Peter Kingman, Nevada Trust Company’s president, and I got talking about these topics at last year’s Contrary Opinion Forum in Vermont. 

He explained how Nevada is to the USA what Luxembourg is to Europe. Like Luxembourg, Nevada attracts people from all over the world because of the strength of its trust laws and the security of the US economy. What has become abundantly clear is the USA is much more proactive about policing the global financial system than it is with heavily scrutinising itself.
 
I negotiated that FullerTreacyMoney subscribers would be able to get a free tax audit from someone who does tax returns for an ex-President if they so wish. At no cost you will at least be able to find out if your current CPA is doing a good job and you might even find out how a favourable structure could go a long way to protecting your family from litigation, estate taxes and possibly income taxes. 

If you’d like to register your interest feel free to follow this link.