President Biden: Expected Tax Changes
Within the next year, it is anticipated that President Biden and his administration will introduce legislation to change various tax laws that will have a significant impact on estate planning. Presently, the estate/gift tax limit is $11.7 million per person ($23.4 million for married couples), with a 40% tax on inherited assets that exceed the estate/gift tax exemption, and tax basis for inherited assets is “stepped up” to the fair market value upon the death of the decedent.
President Biden’s administration has expressed plans to change these (and other) tax laws; specifically, the proposal includes plans to:
- eliminate the “step up” in tax basis at death – and possibly require an estate to pay capital gains tax as if the assets were sold at death;
- reduce the estate/gift tax limit to as low as $3.5 million per person;
- provide a cap on lifetime gifts; and
- increase the federal estate tax rate from 40% to 45%.
With control of the House and Senate, it seems likely that these (or similar) changes will be adopted, possibly as early as this fall. To augment tax revenue, it would not be surprising if the new laws are made effective immediately when passed or perhaps even retroactive to the date the legislation is introduced.
For those clients with estates larger than $3.5 million (or $7 million for married couples), or with assets that have significantly appreciated, we encourage you to set up an appointment to meet with one of our estate planning attorneys. There are certain estate planning techniques, including self-settled grantor trusts and/or Legacy Trusts which will allow you to reduce your exposure to estate tax and to maximize estate planning strategies before the estate tax exclusion is reduced.
With proper planning and implementation you could substantially reduce (and/or eliminate) your tax liability and provide important protections for your heirs. Tax law changes have been identified as a priority of the Biden administration. With proposed changes that could be implemented in the near future, the window to act, and take advantage of current tax laws, may be very short.
To set up an appointment, please call 435-628-1711. We look forward to hearing from you.
Estate Planning Department
Daren R. Barney
Jeffery J. McKenna
Joseph T. Prete
Adam K. Anderson