With the recent election of Past Vice-President, Joe Biden, individuals are curious about how policies will differ after President-Elect Biden’s inauguration. As Biden has mentioned raising estate taxes and changing the taxation of capital assets upon death, many wonder if they should change their Houston estate plan now. While it is unclear what changes – if any – President-Elect Biden will make to estate tax exemptions and taxes, the issue is worth looking into for many families. Below are some of the most common questions individuals have about estate tax exemptions and what they should do.
What is an Estate Tax, and What Is the Current Estate Tax Exemption?
The federal estate tax applies to individuals who receive an inheritance from estates above a certain exclusion limit. In 2020, the estate tax exemption is $11.58 million per person and $23.16 million per married couple. This means if an individual receives less than $11.58 from an estate – or $23.16 if they are part of a married couple – they are not required to pay an estate tax. Currently, this exemption – which was doubled by the 2017 Tax Cuts and Jobs Act – is set to return to $5 million at the end of 2025, in what is called a sunset provision. It is important to note that surviving spouses are normally exempt from estate taxes.
What Has President-Elect Biden Proposed?
Although President-Elect Biden has not announced any specific policy regarding lowering the estate tax exemption, many individuals are concerned the sunset provision will be accelerated, or the exemption could be reduced to even lower than $5 million. It will be difficult to tell what exactly Biden will do until after his inauguration, but estate planning attorneys are staying atop of the news, so they are aware of any changes. And they will make sure to take immediate action on behalf of their clients.
Should I Change my Estate Plan?
Although individuals should think carefully before making any drastic estate planning changes, certain individuals are gifting large amounts of assets now – before their death – to reduce the amount that would be taxed as a part of their estate. However, most people making these drastic changes have between $50 million and $100 million in net worth. Many others are currently holding tight, to see any potential alterations President-Elect Biden makes to estate tax exemptions before making drastic changes to their estate plan – which would lower their net worth and even have a dramatic impact on their lives.
Because estate planning attorneys stay up to date on the relevant information of estate tax exemptions, concerned individuals should seek out an attorney to discuss how future changes to the law may impact their estate plans.
Can an Estate Planning Attorney Help Me?
If you or a loved one is worried about how your estate plan will be impacted by President-Elect Biden’s policies, contact the Houston estate planning attorneys at McCulloch & Miller, PLLC. With years of experience handling estate planning matters, our knowledgeable attorneys will notify you of any potential changes to your estate plan and prepare you for any future changes that may occur. To schedule a free consultation and speak to an attorney, call us today at 713-333-8900.