Advisors always need to weigh the tax implications of their investment advice. This is never easy, but it can be devilishly difficult when trying to figure out all the implications of the recent fiscal cliff tax deal - including higher income tax rates, a 3.8% Medicare tax on passive investments and changes in the estate tax rules.
Conventional wisdom once held that high-growth assets should be held in a bypass trust, since the trust's assets would grow outside the estate. Now, however, with higher capital gains taxes and portability, the opposite approach might be true. An argument can be made that bonds should be held in the bypass trust and equities should be held in the name of the surviving spouse. That way, the stocks' appreciation will get a step-up in basis on the surviving spouse's death.
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