For Georgia residents who are preparing for the future, creating an estate plan is a fundamental aspect of caring for loved ones, addressing property and dealing with business interests. For those who have accrued significant assets, the estate tax is a primary concern. This has the tendency to change depending on the perspective of the presidential administration. With a new president, there may be major adjustments to the estate tax. People who are creating or updating an estate plan should be cognizant of this and act accordingly.
Understanding potential changes to the estate tax
The new president is likely to make key changes to how wealth is transferred. Thus far, three changes are on the horizon. Currently, a single person can transfer $11.58 million to a beneficiary without paying the estate tax. For married couples, it is twice that. Any amount beyond that is subject to being taxed. That may change and people should be aware and take steps to mitigate their liability. It is important to remember that there is a time constraint on this amount as it is set to expire in 2025 regardless of who the president is.
The gift tax exemption may also be reduced to $3.5 million at the time of death. It will be reduced to $1 million for gifts given over a lifetime. The percentage for estate and gift taxes is currently 40%. It would be raised to 45%. Many people might use a tactic called a “step-up.” This lets people receive assets based on their value on the day the testator died. This impacts the taxes should they choose to sell it. However, the new plan would tax unrealized capital gains.
An estate plan can help to prepare for the future
People who are crafting or updating an estate plan need to have a grasp of how possible changes to the law will impact them and their loved ones. Regardless of a person’s political affiliation and what they prefer in terms of a presidential candidate, it is imperative to be flexible and adjust the plan as needed. For guidance and help, being proactive by consulting with a firm that is experienced in wills, trusts and other areas of estate planning may be a wise course of action.