Posted In: Tax - Business & Corporate & Trusts & Estates
By Lori R. Kilpeck on March 16, 2021
Last year was a year that nobody could have anticipated, and thankfully we are seeing light at the end of the tunnel and a brighter 2021! With that being said, much uncertainty still exists as to what, if any, changes will be enacted to our current tax law.
Therefore, our Trusts and Estates Practice Group is closely monitoring developments for potential changes that may impact our clients. Proposals that would impact estate planning and wealth transfer include the following:
- Reduction to the exemption for estate, gift and Generation Skipping Transfer Tax (GST). Without new legislation, the current exemption is $11.7 million (or $23.4 million per couple) for estate and gift taxes and is set to expire on December 31, 2025. On January 1, 2026, the exemption will decrease to $5 million indexed for inflation.
- Increase in the tax rate for gift and estate taxes as well as capital gains. One proposal is an increase from a top rate of 40% to 45% for gift and estate taxes and 39.6% from 20% for capital gains for high-income individuals earning over $1 million annually.
- Elimination of the step-up in basis that assets receive at death.
- New tax laws that would make changes retroactive.
During uncertain times, the best approach is to review your estate plan to confirm your objectives are met and take advantage of the planning opportunities available at this time.
If you have any questions regarding potential tax changes and your estate plan, please contact our Trusts and Estates Practice Group.
This blog is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this Blog in any way seems to contradict advice of counsel, counsel's opinion should control over anything written herein. No attorney client relationship is created or implied by this Blog. © 2022 Brouse McDowell. All rights reserved.