President Donald Trump has proposed a radical tax reform agenda for his term. Part of this reform is his intention to repeal the estate tax. For some people, this will be a considerable change with significant repercussions. But, because more changes to the tax code are anticipated, high-net-worth families should consider what this change could mean for their estate plans.
The estate tax (aka the death tax) is a federal tax on the transfer of property in the estate of someone who has passed. Upon death, your estate’s taxable value is assessed and then taxed. There are many rules on when and how the estate tax can be taken, but President Trump plans to repeal the estate tax altogether.
Comparatively, the estate tax is not a huge revenue producer for the IRS, and many believe the estate tax is baseless, while other forms of property transfers between family members are untaxed, such as property divisions as the result of divorce.
While many applaud the suggested repeal, it’s important to remember that lost revenue will be certainly be gained elsewhere. Though the estate tax may be abolished, the President still plans on initiating a capital gains tax on any assets left to heirs over the $10 million threshold.
Some argue that the estate tax only affects the very wealthy. Indeed, the 2017 federal estate tax exemption is $5.49 million. Estates valued below that threshold will not be taxed. For families with significant wealth, steps should be taken to plan for a potential estate tax, even if the estate tax is repealed because it’s likely to return in the future, even if it is repealed now.
Basing estate plans on proposed tax reform is unwise. However, considering proposed tax changes as well as the changing political climate while planning your estate will help you make educated decisions. Regardless of the size of your estate, now is a great time to sit down and discuss your estate planning options with a Family Business Lawyer®.
Proper planning for your estate means staying abreast of changing tax regulations and ensuring your estate plan minimizes its tax burden and protects the assets you leave behind. Because tax regulations are not set in stone and change quite frequently, it’s important to work with a Family Business Lawyer® to prepare for all eventualities.
And, of course, estate planning is about so much more than just saving taxes, and even about so much more than just your financial estate. As your Family Business Lawyer®, we see estate planning as about helping you make the very best personal, financial and legal decisions for your wealth, health and happiness. We’re there for your loved ones to minimize conflict and ease concerns when you cannot be.
This article is a service of A. J. Yolofsky, Family Business Lawyer®. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.