IE Warning
YOUR BROWSER IS OUT OF DATE!

This website uses the latest web technologies so it requires an up-to-date, fast browser!
Please try Firefox or Chrome!
Back to top
 
 
 

How Donald Trump’s Presidency May Impact Estates

The 2016 Presidential campaign had varying proposals from both Hillary Clinton and Donald Trump in many different areas. One area with the most pronounced differences between the two was on estates. When looking a policy around estate related issues, taxation typically is the most heated topic. On the campaign trail, Hillary Clinton proposed a 65% tax rate for individuals with assets exceeding $500 million and $1 billion for married couples on their assets after death. This policy proposal was made as a reaction to Bernie Sanders as her previous plan called for a 45% top rate.

 

The policy proposals made by President Donald Trump are very different than what would have been proposed by a President Hillary Clinton. His released tax plan calls for repealing the estate tax and placing a capital gains tax on assets left in inheritance above a $10 million level. This proposal will be cheered by many Republicans who have nicknamed the estate tax as the “death tax.” It is fairly controversial though because it is seen as a giveaway to the rich by Democrats. Interestingly, the number of estates who are actually paying the tax was just under 5,000 total in 2015. This low number leads some estate lawyers to question whether it makes sense to have an estate tax at all with its overall low popularity and the generally low amount of revenue collection in the bigger picture.

 

Trump’s proposal is actually seen as a compromise compared to the one passed by the Republican House in April 2015. His position that capital gains held until death and valued over $10 million will be subject to tax is not one that was included in the 2015 bill. Many fear that this could lead to a concentration of wealth in the rich as they have a greater ability to calculate when they should sell specific assets. It is unclear how Donald Trump would address the gift tax as well as other issues in this area. His policy outline thus far only handles the estate tax and capital gains. Congressional Republicans will likely drive the policy direction as part of a larger discussion to simplify the tax code.

 

Recommendations for the Future

 

Politics can be fickle and policy proposals by one administration can be undone by the next. Estate planning should never revolve only around the tax rate as most Americans are not impacted by the estate tax issue and it’s unclear what the final policy outcome will be anyway. It’s been suggested that the estate tax would be handled in the budget reconciliation process, which could lead to dramatic changes from what any one politician may want. Adding flexibility to estates in areas like future gift transfers may make sense for high wealth individuals so that way you can adjust your situation depending on future law changes. The idea that trust planning may become less important due to taxation changes though is absolutely foolish. Estates help protect assets against malpractice and a whole host of other issues.

Ultimately, consulting a lawyer to discuss your particular situation would make the most sense as there will probably be changes in estate law over the next two years. Those who could be impacted the most those are those receiving the inheritance as what they do with received assets will perhaps be the most dictated by changes in the law.

Bio

Patrick O’Keefe is a Writer for Blackford & Flohr. Blackford & Flohr is a criminal defense and estate planning law firm based in Severna Park, MD.

 

References

Hillary Clinton Proposes 65% Top Rate for Estate Tax
Will Trump Victory Yield Estate Tax Repeal?
The Future Of Estate Planning And Potential Repeal Under President Trump

 

Disclaimer
The materials available at this website are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Website or any of the e-mail links contained within the site do not create an attorney-client relationship between Blackford & Flohr and the user or browser.

COMMENTS

There aren't any comments yet.

LEAVE A REPLY

Your email address will not be published. Required fields are marked *