Question Mark with Estate Planning | Dallas Estate Planning Lawyer

With the Georgia runoff concluded, change within our tax world is almost certainly inevitable. We expect tax changes to come that could have an impact on your estate planning documents and assets.  

The Democrats have a majority in both the Senate and the House, meaning that the proposals previously made by President Elect Joe Biden will likely be passed. Some of these tax changes could have far reaching economic effects. While we cannot know the exact changes that will be made, we do know the likely changes to occur.

Although it appears that there will be major income tax changes as well, the purpose of this article is to briefly discuss the possible changes relating to estate planning.

It is likely that the estate tax exemption will be reduced from $11.7 million to $5 million, $3.5 million, or possibly even less per person.  An increase in the estate tax rate is anticipated as well. The most consequential proposal, however, is the elimination of the tax-free step-up in basis.

The following is an example of a step up in basis:  If you bought stock a few years ago for $10 a share and upon your death, the stock price was $100 per share, $100 would be its new basis.  The stock received a “step up” in basis to the amount on the date of your death, meaning that there would be no capital gains due if the stock were sold after your death for $100 per share. 

Given this same scenario under Biden’s proposal, there would be NO step up in basis. This means that if the stock were sold for $100 per share after your death, capital gains would be owed on the difference between the original price per share when you bought it and the price it sold for after your death.  As you can imagine, this could be very significant depending on your assets.

It is important to keep in mind that although these changes have not yet been made, we must be vigilant in keeping up to date on the likelihood of these changes occurring.

Do You Need To Speak With An Experienced Estate Planning Lawyer In The Dallas Area?

If you need to speak to an experienced estate planning attorney please contact us online or call our Dallas office directly at 214.559.7202. We help clients throughout the Dallas area with all of their estate planning needs and look forward to helping you.


Lori Ashmore Peters
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Helping Dallas area families with all of their legal Estate Planning, Probate and Business Planning needs.