Trump’s proposed estate tax repeal, details of the ‘death tax’, and how you should prepare your estate for generational wealth transfer.
President Donald Trump will include the estate tax repeal in his tax reform proposal, the administration's top economic advisor has confirmed. This relates to the Federal, not any state-level estate taxes.
Gary Cohn is Chief Economic Advisor to President Trump. He spoke in the White House Press Briefing Room on April 27, 2017. According to Think Advisor,
"We're going to repeal the death tax," Cohn said. "The threat of being hurt by the death tax leads small-business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die. No one wants to see their children have to sell the family business to pay an unfair tax."
Details of The ‘Death Tax’ Repeal And Why It’s In The Budget
According to IRS.gov, the estate tax, also known as the “death tax”, is “a tax on your right to transfer property at your death.”
Estates are now taxed at 40 percent at the time of a person’s death. The tax applies to all assets after $5.49 million per individual and $10.98 million per couple. With proper planning, the average effective rate can be lower under the current tax system. The death tax repeal would not be aimed at lower and middle class families, instead it’s focused on higher net worth individuals and couples.
According to Cohn, the reason for the estate tax repeal is to spur on the American economy. Upper class families provide the capital to invest in business development. Capital infusion often spurs job growth and opportunity for all Americans, which is a major push in Trump’s administration.
The budget was delivered to Congress in May and has yet to pass the House or Senate. The budget is not expected to pass as proposed and the death tax is still in force for now. Depending on the political climate and future Congressional votes, the death tax may remain. However, we are hopeful that some cut of the estate tax cut will eventually pass.
Estate Planning With or Without The Death Tax
Regardless of what happens with the death tax, it’s prudent to consult with an estate planning attorney about your situation. Whenever there are significant assets to transfer to the next generation, there are inevitable complications for every family. This includes issues with some state-level estate taxes.
If you need a good recommendation for an estate planning attorney, please reach out. We love helping clients achieve all their financial goals including helping with legacy planning.
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