Post-Election Legal Update: Tax Reform Snapshot
As the dust appears to be finally settling on the 2016 Presidential Election, the legal world is steadying itself for the likely changes headed our way as Republican President-Elect Donald Trump prepares to take office in January with a Republican controlled House and Senate. High on the list of legislative initiatives will be tax reform. While President-elect Trump and Congressional Republicans might not see eye-to-eye on every detail of tax reform, they certainly share many common goals. By comparing Trump’s pre-election proposals and the Republicans’ Tax Reform Task Force Blueprint, we can get an idea of some likely modifications to come:
When it comes to estate planning matters, what can we take away from this snapshot? A few things:
- Both plans are lacking in detail at present; for example, neither has addressed how the gift tax exclusion or basis step-up might be impacted if the estate tax is eliminated.
- The fact is, only 0.2% of Americans are going to be impacted by any repeal of the estate tax.
- The biggest motivator for revising current estate plans under such reform may simply be…simplifying: taking a more complex tax-driven plan that might now be unnecessarily restrictive or administratively burdensome and making it more concise and efficient.
- Revising more complex plans may have the added benefit of providing an opportunity for estate planning attorneys to better address other client goals – for example, spousal access. Such goals which previously took a backseat to tax-planning, could now be a drafting priority.
- Personal income tax and non-tax issues will continue to be a primary focus of estate planning for most individuals.
- If any tax reform occurs in 2017 – and it likely will – then the lowering of income tax brackets are to be expected.
- Accordingly, individuals might discuss with their accountant whether any income qualifies for a one year deferral in order to benefit from such reductions.
As all of these impending changes unfold, The Weeks Law Firm will be here, working to keep you informed and making sure that your estate plan comports to the law of the day.