Wealth transfer planning is expected to see a boom in 2011 and 2012, driven by highly favorable income tax and estate laws effected by the Tax Reform Act of 2010, according to Handler Thayer's Advanced Planning & Family Office Group. Meanwhile, heightened global risk means wealthy families and family offices are devoting an increasing level of resources to risk management.

The firm is encouraging clients to take advantage of the current situation and implement gifts and advanced wealth transfer strategies as soon as possible, “rather than waiting for late 2012, just before the current provisions expire and 55 per cent estate tax rates with a $1 million exclusion amount automatically return,” it said in a statement.

Handler Thayer said the recommendation mitigates the risk that the 2012 budget proposals raise transfer tax rates and lower the exclusion amount from the start of next year, and also shifts future appreciation of the transferor's estate immediately, capitalising on low valutaions of businesses, real estate and private equity.

“The unusually generous 35 per cent rates and $5 million unified exclusion amount also provide the unique opportunity for gift tax and GST tax rescue strategies. Previous mistakes, valuation problems and failures to properly allocate GST exclusions may be solved elegantly during the current window period,” the private client law firm advised.

Another trend is for family offices to emphasize risk management in their strategies and place considerable resources into this area, Handler Thayer's family office practice said. This is reflected in the fact wealthy families and family offices continue to take “highly defensive” stances in investment, risk management, security and privacy, and means the major family office associations are focusing on risk management in their training programs, research and publications.

Particularly, key concerns include that elevated future levels of income and payroll tax will inordinately fall on “fewer and fewer taxpayers”, and that the globalization of businesses, investments and family offices will see a flight of assets out of the US.

Meanwhile, exponential growth in technology constantly creates new and unforeseen challenges to wealthy families related to cyber-security, personal security, reputational risk, and privacy and confidentiality, according to Tom Livergood, chief executive of the Family Wealth Alliance. He added that these risks increase further in times of crisis, such as the Japan disaster and the unrest in the Middle East, and the Alliance Security Council was formed to tackle these problems by segmenting and addressing risk in 10 different threat areas.