With the release of President Trump’s tax plan and Republican majorities in Congress, it seems inevitable that the estate tax will go away. That does not eliminate the need to do estate planning.
A big part of modern estate planning is planning around the federal estate tax. Many estate planning instruments were designed to help lower the estate tax burden on wealthy estates. Profit Law Firm helps clients reduce federal estate taxes.
Without an estate tax, it might seem that there is not much of a reason to do complex estate planning at all. Some people anticipate that will be the case soon, since President Trump has released a tax proposal that would eliminate the estate tax and Republicans who hold majorities in both houses of Congress agree with the idea.
However, it is not that simple as Financial Advisor recently discussed in “Estate Planning: It’s Not Over.” Some states such as Maryland and DC, have state estate taxes, at $3 million and $2 million, respectively see more information about these estate taxes. So residents in these states will have to do some extra planning regardless of the federal tax rates and a Maryland estate planning attorney can help.
It still is not clear when, if and how the federal estate tax might be repealed.
Congress could choose to phase it out over a few years or scrap the idea entirely, if they cannot agree on offsetting spending cuts or where to raise revenues from elsewhere. Senate Democrats could also mount a filibuster over any tax plan that Republicans propose, which they are expected to do.
No elimination of the estate tax is permanent, of course. Even if it passed now, it could always be reinstated when Democrats control government again.
While you might be excited about the elimination of the estate tax, do not make the mistake of thinking that means you can make your estate plans with the assumption in mind that it will go away for good, if it does at all.
Reference: Financial Advisor (April 3, 2017) “Estate Planning: It’s Not Over.”