Is One of President Trump's Campaign Promises About to be Fulfilled? The Full Repeal of the Estate Tax? | Brentwood, Tennessee Estate Planning Attorney

During the 2016 Presidential Election campaign there were promises on both sides regarding changes to the tax code. From an estate planning context, one candidate proposed a full repeal of the Estate Tax and the Generation Skipping Transfer Tax, while the other candidate proposed making the Estate Tax and the Generation Skipping Transfer Tax being applied to more individuals and families. However, as of November 2nd, we got our first look at what these overarching tax law changes may mean for Americans.

            Let’s take a look at what the Tax Cuts and Jobs Act Proposes:

Full Repeal of the Federal Estate Tax and Generation Skipping Transfer Tax

The most talked about change is the complete repeal of the Federal Estate Tax and Generation Skipping Transfer Tax. Specifically, the bill proposes a complete repeal for deaths occurring after December 31, 2023. However, under the current federal estate tax law, less than 1% of Americans have taxable estates. Therefore, although talked about by Politicians and pundits in the media, this portion of the tax bill will not have much of an effect on a majority of Americans. However, for those who do have taxable estates under the current tax law, there is still a need for estate tax planning as the full repeal will not occur until 2023.

 

Lowering of the Income Tax Rates

In addition to the estate tax, the tax bill will lower the tax rates for lower to middle income Americans to 0%, 12%, 25%, and 35% depending upon certain gross income levels. However, the highest earning Americans will still continue to pay a 39.6% federal income tax.

 

Increase of Standard Deduction

Under the new tax bill, the standard deduction will change from $6,350 for individuals and $12,700 for married couples to $12,000 for individuals and $24,000 for married couples.

 

No More Alternative Minimum Tax

The new tax bill proposes to repeal the alternative minimum tax and save families the difficulty in calculating their taxes twice each year.

 

Lowering of the Corporate Tax Rate

Within the new tax bill is a proposal to lower the corporate tax rate from 35% to 20%.

 

These are just some of the tax law changes proposed by the Tax Cuts and Job Acts Bill revealed on November 2nd, 2017. It is yet to be seen how this will play out toward ratification into law.

What Should I Change With My Estate Planning in Anticipation of this New Law?

As I have been telling many of my clients who have asked … nothing! There is nothing in the proposed Tax Cuts and Jobs Act which will implicate the estate planning of many of our clients. Less than 1% of American will have a taxable estate, and for the ones who do, the tax law changes are not set to take effect for another six years!

In addition, there very well could be debate and compromise regarding the various proposed tax law changes. Also, there very well could be a new administration in in the oval office in six years that may seek to change the estate tax law yet again.

The best way to protect your assets and your family is not to base your estate planning strategy on who happens to be in the White House.

If you have questions about estate planning, about the contents of this article, or want to schedule a telephone or in person consultation regarding your estate planning strategy, contact our office at (615) 472-2482 to schedule an initial consultation. 

Daniel A. Perry
Connect with me
Focused on helping seniors, individuals with disabilities and small business owners make informed decisions.
Be the first to comment!
Post a Comment