Have you considered that, with the new year beginning, it may be a good time to make or reevaluate your estate plan? To help motivate you to review your estate plan, let us discuss three estate planning updates you need to understand in this new year.
1. Reduction in the gift and estate tax exemption. During the Trump presidency, the federal gift and estate tax exemption was nearly doubled, and is currently just over $11.5 million. This means that you can gift your beneficiaries just over $11.5 million through your estate in the event of your death without implicating the estate tax, although your state may impose other taxes. President-elect Joseph Biden has promised to reduce the exemption which means you may wish to discuss a strategy with your estate planning attorney to minimize the impact of a reduction of the gift and estate tax exemption on your beneficiaries.
2. Changes to the “step-up basis” rules. President-elect Joseph Biden also promised modifications to the current rules allowing a person inheriting property from a decedent’s estate to take a stepped-up basis in the property for tax purposes. It is unclear if and how changes will be made to the step-up basis rules. Any changes made to the current step-up basis rules, however, can impact how you want to dispose of your real property in your estate plan. This means you may want to consult with your attorney to prepare and make a plan.
3. Increasing capital gains taxes. A final campaign promise of President-elect Joseph Biden was to increase current capital gains taxes, which are currently capped at 20 percent. An increase in the way capital gains are taxed can have a dramatic impact on wealthy families, which means it can be important to discuss changes and improvements to your estate plan in the event these tax law changes affect your estate.
For assistance updating your estate plan or putting a strong estate plan in place, our office is here to assist. Please reach out to our office to schedule an appointment.