Posted by: The Life and Legacy Planning Group
Impacts of the Trump Presidency on Estate Planning: Your Quick Guide
It’s official — the Electoral College voted on December 19, 2016, essentially completing the 2016 presidential election cycle. With that bit of uncertainty behind us and a fresh year starting out, here’s what you need to know about planning your estate under the incoming Trump administration and Republican-controlled Congress.
President Trump’s tax plan
A new president usually means major shakeups in fiscal and tax policy, and Trump’s tax plan is no exception. Here are several of the proposed changes we will potentially see rolling out during his administration:
- The repeal of the estate tax, potentially with a “sunset provision” (we’ve seen that before)
- Lower income tax rates
- The introduction of a tax deduction for childcare costs
- Dependent care savings accounts (DCSAs) with conditional matching
- The switch from seven to three tax brackets
- Increased standard joint deduction from $12,600 to $30,000
- Increased itemized deductions cap from $100,000 to $200,000
- Decrease in business tax from 35 percent to 15 percent
Of these proposed changes, the repeal of the estate tax, also known as the “death tax,” means your assets would not be taxed by the federal government upon your death and would transfer in full to your beneficiaries. There is also speculation that the gift and generation-skipping taxes may be repealed as well, though some prominent advisors suggest that gift taxes may not go away. All of these actions could result in a greater ability to keep wealth within your family, but we will have to wait until we see the final legislation to know the exact mechanics. As always, the devil is in the details. Additionally, the proposed changes would also negatively impact taxation on charitable gifts and other philanthropic gestures contained in your estate plan.
Estate taxes differ from state to state, so the wisest move in your playbook is to go over your estate plan with an experienced estate planning attorney to discover how these changes may impact its other components. For instance, at this point, we are aware of no proposed change to the Illinois state estate tax.
All of that having been said, proposed policy changes must go through Congress, which has its own agenda and ideas about fiscal and tax policy. So, staying on top of new developments and in close contact with your team means you’ll be prepared for whatever unfolds over the coming years.
More benefits to trust-based planning
As before, there are also many non-tax-related benefits to trust-based planning that you can take advantage of regardless of which proposed changes take place under the new administration and Congress. Just a few key benefits of trust-based planning include:
- Greater privacy for your family and avoidance of probate
- Incapacity protection and avoidance of conservatorship or guardianship
- The creation of lifetime beneficiary directed trusts providing long-term asset protection benefits to your heirs
- Multi-generational legacy planning that provides benefits beyond the mere transfer of wealth
Give us a call today
Not even the nation’s top financial experts know exactly how Trump’s presidency and the Republican-run Congress will impact estate planning best practices for every citizen, but a skilled estate planning attorney can guide your estate planning in a smart, careful, and decisive manner. We know that changes are inevitable, and we can address those changes as they occur and to the extent that they affect your goals and plans for your family.
We’re here to help you navigate policy changes to ensure your estate is managed as beneficially as possible for you and your family for generations to come. Give us a call today to get the ball rolling.