Strategies to Consider in an Election Year
Wealth Transfer Strategies to Consider in an Election Year – With a push by the Democratic party to return federal estate taxes to their historic norms, taxpayers need to act now before Congress passes legislation that could adversely impact their estates.
Currently, the federal estate and gift tax exemption is set at $11.58 million per taxpayer. Assets included in a decedent’s estate that exceed the decedent’s remaining exemption available at death are taxed at a federal rate of 40 percent (with some states adding an additional state estate tax). However, each asset included in the decedent’s estate receives an income tax basis adjustment so that the asset’s basis equals its fair market value on the date of the decedent’s death. Thus, beneficiaries realize capital gain upon the subsequent sale of an asset only to the extent of the asset’s appreciation since the decedent’s death.
If the election results in a political party change, it could mean not only lower estate and gift tax exemption amounts but also the end of the longtime taxpayer benefit of a stepped-up basis at death. To avoid the negative impact of these potential changes, there are a few wealth transfer strategies it would be prudent to consider before the year-end.
We’re Here to Help
With the passage of Prop 19, we have already begun to see the end of benefits for assets being passed to children. For more information contact Hudack Law today at (877) 314-4309 Toll-free, please visit areas of service (open link in a new tab) or hudacklaw.com (open link in a new tab).