With a Republican president in the White House next year and a Republican-controlled Congress, some people who have considerable assets to leave to their heirs are hoping that the estate tax (sometimes referred to by those opposed to it as the “death tax”) will be repealed.
The majority of Americans don’t have to pay a federal estate tax. For 2016, it applies to estates valued at $5,450,000 or more. That number rises to $5,490,000 in 2017.
A federal estate tax repeal may not be as easy as it seems. Even though the Republicans will continue to be the majority party in the Senate, they don’t have enough votes required (60) to hold off a filibuster of such legislation by the Democrats. Even if the estate tax is repealed, it could be replaced by one or more other regulations, such as a capital gains reporting requirement at death.
Even if it is repealed, there could be a sunset provision that would prevent the change from going into effect for years. Of course, Republicans could opt to keep the estate tax as a negotiating tactic with Democrats to get something else they’d like even more.
This uncertainty shouldn’t keep people from going forward with their estate planning. Both state and federal laws will always be changing. Experienced California estate planning attorneys keep abreast of these changes so that they can appropriately advise their clients. The important thing is to ensure that your wishes for your estate are codified and that your heirs and beneficiaries are spared as much expense and complication as possible after you’re gone.
Source: WealthManagement.com, “The Future Of Estate Planning And Potential Repeal Under President Trump,” Nov. 16, 2016