Wednesday, January 27, 2021
With the combination of the new president, Joe Biden, and the rebalancing of the House and Senate, it may be necessary to prepare for tax changes. During his campaign las year, Joe Biden announced a tax plan that "would decrease he federal estate tax exemption from the current amount of $11.7 million to $3.5 million. In addition, Biden’s tax plan, if implemented, would raise the individual income, capital gains, and payroll taxes for individuals with high levels of income. The changes to the capital gains tax would appear to be the most significant."
The Tax Cuts and Jobs Act (TCJA) doubled the estate, gift and generation skipping transfer tax exemption to $10 million ($11.7 million adjusted for inflation) set to run from 2018 until 2025. However, with President Biden's tax plan, the exemption amount would be reduced to $5 million before the set date of the end of 2025. It is possible that the rate goes as low as $3.5 million, the amount the rate was in 2009.
It may be necessary to take a look at your estate plan as these changes could have a big effect. You may want figure out what gifts are linked to the amount of exemption and use the exemption before it is reduced.
If you believe that these changes will or could affect you, it is imperative that you visit with an estate planner to review your financial situation and the implications of the potential tax changes.
See Trusts and Estates 2021 Tax Update, Downs, Rachlin, Martin PLLC, January 22, 2021.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.