Politics impacts virtually every aspect of our lives, whether we realize it or not. That's because our elected leaders make and sign the laws by which we all are required to live. The new Trump administration and the Republican-led Congress have indicated that there are a number of areas in which they plan to exert their authority in the near future.
Of course, talking about sweeping changes and being able to implement them are two very different things. The details of some reform plans remain unclear, leaving Americans with a good deal of uncertainty about things like health care, immigration and even estate planning.
According to one estate and wealth planning advisor, "Estate-tax repeal is now a political issue, not a revenue one." Donald Trump has long talked about his intention to repeal the estate tax (often referred to by those who oppose it as the "death tax").
As the tax levied on high-value estates, currently, individual estates of $5.45 million and above are subject to estate taxes. It doesn't impact the vast majority of Americans, but those who are affected can end up paying a good deal of money in taxes on a loved one's estate.
Estate planning advisors say that people shouldn't amend their estate plans based on how a potential estate tax repeal and other tax reforms may play out. One says, "Now is not the time to make drastic changes to estate plans."
There's a possibility that if the estate tax is repealed, it could be replaced by a capital gains tax, which Trump has mentioned in the past. Whether the tax would kick in only when someone sells an asset in the estate or would apply to unrealized gains remains to be seen.
Of course, those planning their estates and those inheriting them also need to be aware of state laws and potential changes to them. That's why if you live here in California or are inheriting all or part of an estate here, it's essential to have the guidance of an experienced estate planning attorney who is up-to-date on both state and federal laws impacting California estates.
Source: CNBC, "Estate-planning pros take wait-and-see approach to Trump," Andrew Osterland, Jan. 11, 2017