President Biden’s estate tax propositions could have a BIG impact on Estate Planning. With the passing of Inauguration Day, the entire nation is waiting to see if his tax propositions will become a reality.
This also seems more and more likely due to the Democrats’ maintenance of a majority in the House along with the new 50-50 Senate divide.
Estate Planning Changes
In regard to estate planning, President Biden has proposed to lower the estate tax exemption amount to either $5 million, $3.5 million, or perhaps even lower, per individual, and either $10 million, $7 million, or perhaps even lower per married couple. He also aims to abolish the step-up in basis which could result in tax increases for people inheriting property or assets.
While the Democrats’ control of the House and Senate would appear to make the Biden Plan’s enactment a certainty, that is necessarily the case. This is where it could become complicated. It generally takes 60 votes in the Senate to avoid a filibuster. This means that a handful of Republican Senators will need to be in support of each proposition before it can be passed. There is an exemption to this vote of 60 known as reconciliation. Reconciliation allows the passage of a bill with simple majority support in the Senate. While this process cannot be applied to all types of legislation, it has commonly been used for tax measures.
When Could These Changes Come Into Effect?
If President Biden’s estate tax plans pass, it is important to take note of their dates of effect. They could be the date of the signing, a future date, or retroactively, meaning they could be considered effective at an earlier date. For example, if the bill is signed on February 1st of 2021, the effective date could be September 1st of 2021, February 1st of 2021, or they could even decide that the bill took effect as of January 1st of 2021.
The bottom line is that there is much uncertainty with the future of the estate tax exemption. However, it is important now to speak with an estate lawyer to make sure you stay up to date with these proposals and that your estate plan continues to do exactly what you had intended it to.
If you need the assistance of an Estate Planning Attorney in Dallas, Texas and surrounding areas, we can help.
Call our office at 214-559-7202 or contact us online to schedule your complimentary consultation with one of our experienced planning attorneys.