Adapting Your Estate Planning Strategy to Trump Era Tax Reforms
Estate planning is back in the limelight with Trump’s new tax reforms. What does this mean for your wealth transfer strategy?
What if the dynamics of estate planning could change dramatically, and your current strategy is ill-prepared for these shifts? The Trump administration’s new tax reforms, dubbed the ‘One Big Beautiful Bill Act’, have brought estate planning back into the limelight, potentially altering how wealth is transferred, taxed, and preserved. Is it time to take action?
Among the significant changes is the federal estate unitary credit, set to expire at the end of 2025. Currently at $13.99 million for individuals and $28 million for couples, the amount subject to federal estate tax could reduce to roughly $7 million for individuals or $14 million for couples post-2025, unless there are further changes to the law.
While the Trump administration could make the current exemption amount permanent, reducing the need for sophisticated tax-free estate planning for 99% of U.S. citizens, it’s crucial to remember that a will is still essential. The uncertainty surrounding these tax changes makes it prudent to assume the credit will not be reapproved.
Other proposed tax changes could indirectly affect estate planning by influencing projected federal revenue. For example, changes to the limit on deductions of state and local taxes (SALT), tax on tips and social security, corporate and capital gains tax rates, and individual income tax rates could all play a role.
To mitigate potential impacts, it’s advisable to explore ways to reduce your taxable estate and gift tax liability. This might involve strategic cash gifts or timing the sale of a business or stocks to minimize capital gains taxes. However, remember, estate planning depends on realistic decision-making and strategizing.
Source: www.inkl.com