Atlanta native Walter Cohen never strayed far from his roots. The same goes for the law practice he’s built over the past 21 years. Changes in federal tax laws haven’t caused him to dramatically change the way his firm guides clients, he told the AJT:
“Estate planning is as important as ever. We used to do a lot of tax planning. You take taxes out of the equation because of the large exemptions, but you still have estate planning.”
Growing up in Atlanta, Cohen attended Northside High School, and his family has belonged to Ahavath Achim Synagogue since the 1920s. Although he went off to the University of North Carolina to obtain a bachelor’s in economics, he returned to the University of Georgia for law school before receiving a master’s in tax law from New York University.
After practicing with a law firm in St. Louis, Cohen returned to Georgia again to practice with a large, then a mid-sized firm before starting his own practice in 1986. A little more than a decade later he started Cohen & Caproni with Albert Caproni. Cohen is the only Jewish lawyer in his firm of four attorneys.
Half of his practice is dedicated to estate planning and the other half, business and tax planning.
In the 1970s, when Cohen began practicing law, the estate tax exemption was $60,000. Today it’s $11.4 million for an individual, and double that for a couple. “We filed one or two estate returns in the last year. In the old days we might have prepared 10 to 20.”
The firm probably has five or 10 clients with estates greater than $22 million, he said.
They mostly work with small, closely-held companies, which can include family businesses. In such cases, estate planning is crucial to make sure the company’s assets are passed down as efficiently as possible.
For the self-employed and those in a partnership or limited liability company, Cohen advises clients about the new pass-through deduction. Married people can receive a 20 percent deduction on qualified business income if their taxable income is below $315,000.
The deduction can be substantial for small business owners, but more restrictive for those in service professions, such as doctors, lawyers and accountants. “In general, I thought it was a windfall to many taxpayers.”
Another change in the tax law that affects his clients is the increase of the standard tax deduction, which many feared would diminish charitable contributions. “With the increase of the standard deduction to $12,000 per person and $24,000 per couple, people may decide to decrease their gifts to charity since they won’t receive a tax benefit.”
One way to preserve the benefits of a charitable donation may be to use a donor-advised fund in which a large deductible charitable contribution can be made in the first year and doled out over a three-year period. He cited the Jewish Federation of Greater Atlanta as an example of a charity with a DAF. “This may be useful for individuals who plan to make annual charitable contributions of more than a couple thousand dollars.”
Another investment he highly recommends is a 529 tax-free savings plan, which was historically only for college expenses but can now be used for elementary and secondary school education, he said. In the Jewish community, that means private day school tuition can be paid through the 529 fund. “The benefits are that the 529 grows income tax-free.”
The ALEF Fund also helps private schools. It allows taxpayers to direct state income tax dollars to scholarships for children to attend Jewish preschools and day schools. “I have contributed to it for years,” he said.
With the elimination of the federal charitable deduction for contributions to such a fund, though, the incentive to invest in it has diminished. This is an example of how charitable contributions are being impacted by the tax law changes, he said.
It still doesn’t hurt to direct tax money to a worthy cause. “You are going to pay $2,500 to the state anyway, so you might as well pick where you want to send the money.”