April 19, 2021 | eFocus @ Legacy

Potential Estate Planning Pitfalls Under Biden Administration’s Legislative Agenda

Photo of Susan HickeyBy: Susan M. Hickey, Vice President & Senior Trust and Financial Advisor

While most of us are familiar with the phrase “nothing is certain except death and taxes,” it appears that a changing tax code with each new presidential administration is, if not a certainty, at least a new normal.

In his first press conference, President Biden was very clear about his priorities. He proposed a $2 trillion infrastructure bill that will be added to the COVID relief package. The combined cost could top $4 trillion. He has also indicated how his administration intends to pay for this agenda and most experts agree that it will likely include significant changes to the current estate tax structure.

Changes are now looming larger than ever and it will be critical to be aware of the potential tax impact to your estate plan:

  1. Federal estate/gift tax exemption: The current exemption, adjusted for inflation, is $11.7 million per individual ($23.4 million for a married couple). Proposed changes range from a $3.5 million to $5.7 million exemption per individual.
  2. Federal estate tax rate: The federal estate tax applied to estates larger than the current $11.7 million exemption amount is 40%. An increase to at least 45% is being considered.
  3. Step-up in basis: Currently, inherited assets receive a step-up in tax basis at death. There is speculation that the step-up at death will be eliminated and the basis of such assets will carry-over. Capital gains and dividend tax rates for high income earners are also facing income tax increases.

These issues fell off the radar for most taxpayers during the previous administration. They are now back in the legislative spotlight. While there is no way to predict exactly what will happen, it is a good time to dust off your estate planning documents and review them through an entirely new lens. At Legacy Private Trust Company, we are here to assist with that conversation. We have been working with successful Wisconsin families for over 17 years.

If you are a Legacy client and have questions or concerns, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or info@lptrust.com.