As we get closer to an election, it’s important to think about how your estate plan might need to be updated or changed altogether in light of who is elected. Some of the most common issues that have been popping up with Biden’s proposed tax plans have to do with accelerated capital gains and bonuses, deferring deductions and more.
Some important steps you’ll need to take before the end of the year depending on who is elected will rely on the insight and experience of your trusted estate planning attorney. There are several important things you need to have top of mind as a result of published proposals from Joe Biden or possible results from a legislative committee looking at revenue. These include:
- Taxing of capital gains at ordinary income rates and similar treatment for dividends.
- Potential eliminations of the step ups that exempt unrealized capital gains at death.
- Acceleration of the Trump tax cuts that would start on January 1st, 2021 rather than January 1st, 2026.
- Limiting deduction value to 28% even in cases in which the taxpayer’s income bracket is higher than that.
- Imposition of a 12.4% social security tax.
- Elimination of local and state income tax ceiling of $10,000.
All of these important and complicated issues should be discussed directly with your trusted estate planning lawyer. Make sure to schedule a consultation as soon as possible after the election if there are significant tax changes on the table.