Spiro J. Verras Blog

Monday, December 16, 2019

Consider Estate Planning Before the 2020 Election

What changes could come to the field of estate taxation if a new President takes office?

The 2020 election is fast approaching and the outcome of this highly anticipated election could have much import on our daily lives. One area that may see change should a Democratic President take office is that of estate planning. Several top Democratic candidates have proposed drastic changes to popular estate tax laws. Now might be the ideal time to consider creating or updating your estate plan so that in the event of a political shakeup, you have properly minimized your estate tax exposure to the fullest extent possible.

Estate Tax Changes Could Impact All of Us

No matter your political party or personal stance on taxation, it is important to understand the changes that might arise after the next election. Bernie Sanders, a top candidate at the moment, has proposed a reduction of the gift tax exemption from its current $11.4 million to just $1 million. Similarly, the estate exemption could decrease from $11.4 million to $3.5 million. For many wealthier Americans, these estate tax alterations could cost your estate greatly.

Rather than taking a wait and see approach, it may be wise to take the time now to plan for any possible estate tax changes that could come. One step you can take now is to maximize your gift giving while the current exemption still stands. Consider gifting assets to your irrevocable trust. This will allow you asset protection regardless as to whether the gift tax exemption changes. Speak to your estate planning attorney before gifting assets, as you may want to maintain the ability to access these funds in case you should need them in the future.

There are many options to gift assets but still maintain control. Options include creating a grantor trust, creating a trust with loaning power, or setting up a spousal lifetime access trust. Now is the time to review these options with your estate planning attorney to determine what the next best step might be. Planning now, in a way that will benefit you and your family regardless of what political changes come about, could save you greatly in the long run.

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