Impact of a Newly-Elected President on Estate Planning
The Impact of the Newly-Elected President on Estate Planning, etc.
The New President was Elected this Year
The new President of the United States was elected recently. President Biden may bring some changes to rules that may affect the area of Estate Planning.
New Estate Tax Rules for 2021
The IRS announced in October, 2020 that the Estate Tax Exemption Amount in 2021 will be 11.7 million dollars per individual. The Gift Tax will remain at $15,000 per individual in 2021. The Estate Tax Exemption Amount in 2021 for foreign individuals will remain at $60,000 per person.
What changes may be on the way?
The new President may make the following changes with respect to estate-related taxes:
- Repeal of the Step-up in Basis which can lead to an increase in Capital Gains Tax (*Step-up in Basis means that when property passes to an heir upon a death, the heir succeeds to the property at the market value of the property at the time of death and not at its original value when it was first purchased. The heir can then sell the property with minimal or no Capital Gains Tax, but this rule can be repealed under the new President's rule); and
- Decrease in the Estate Tax Exemption Amount.
- (It is not clear as to what degree the new President will decide to reduce the Estate Tax Exemption Amount, but there is talk that it may be reduced to as low as $3.5 million, which was the Estate Tax Exemption Amount in 2009.
It may be good to consider any changes that may take place under the new presidential rule and talk to professionals to consider gifting, etc. that may help reduce your estate tax obligations.Article Source/Courtesy of: Yuka Hongo, Esq. (Hongo Law Office, LLLC)
This information is not intended to be a substitute for specific individualized tax, legal or estate planning advice as individual situations will vary. HawaiiEstateAndTrust.com nor its registered representatives or employees, offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.
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