Property Planning Points After Elections To Think about – New York Property Planning Lawyer Weblog – Nov 17, 2020
While some people are still debating about it Results of the 2020 electionsit is very likely that Joseph R Biden Jr.
will be the next President of the United States. As president, Biden and his administration will likely seek to pass new regulations that will remove some estate planning options to generate revenue and pay for costs associated with things like increasing assistance during the pandemic. While it is only possible to speculate at this point, this article discusses some of the most likely changes during administration that individuals should consider when planning an estate.
# 1 – Exemption amounts are reduced
Estate and gift tax exemptions are currently high ($ 11,580,000), but that amount is expected to decrease again in 2026 (to $ 5,850,000). However, the Biden government could very well pass laws reducing these levels more quickly as soon as the beginning of January 2021. Individuals interested in these exemptions should therefore consider giving gifts now in order to avail of these exemptions . Remember, however, that these exemptions will only benefit if you donate $ 11,580,000.
# 2 – Increase the capital gains tax rate
The Biden administration will almost certainly lead to increased tax rates. While the exact nature of these increases remains uncertain, the Biden government previously proposed taxing long-term capital gains for taxpayers with incomes greater than $ 1 million at normal income rates. Taxpayers may choose to use certain techniques, such as the sale of valued assets, to reduce the impact of increased tax rates. However, the decision to sell assets now should be considered in light of the taxes that would now be incurred.
# 3 – Increased tax rates
Estate, gift and generation transfer taxes are currently 40%. However, the Biden government has proposed increasing these taxes to 55%. So, if at any point you are planning on giving a gift that would incur these taxes, consider doing so now to benefit from discounted rates.
# 4 – Additional GRAT restrictions
The grantor kept pension foundations (GRATs) are trusts where a scholarship holder makes a donation and receives an annuity or payment over a set period of time. The advantage of GRATs is that individuals or trusts that are not part of the grantor’s taxable estate can transfer an increase in value beyond a certain rate of return (currently 0.4%). Two likely upcoming changes to GRATS are to extend the length of time grantees are required to adhere to the GRAT, and possibly pass a law making minimum gifts required for GRAT to be valid. To avoid these later complications, individuals interested in creating and funding a GRAT should consider doing so before the end of the year.
Speak to a knowledgeable estate planning attorney
The estate planning process is complex, but a knowledgeable estate planning attorney can help you figure out how to get the most out of your situation and which strategy will work best for you. Contact Law firm Ettinger today to schedule a free case assessment.