Election years create a lot of uncertainty when it comes to laws – especially tax law. And though the pundits talk about this year’s race being unlike anything in our history, the tax uncertainty is still a common thread tying back to elections past.
It is important to understand the various taxes that could change, and the impacts each will have on you, and potentially your estate plan.
The director of education at the American Academy of Estate Planning Attorneys, Steve Harnett, wrote a nice piece summarizing Hillary Clinton’s Tax Plan.
The big takeaway from Hillary’s estate tax proposal is that it would be the first time in the United States’ history that the applicable exemption amount would move backward. Currently a person passing away this year receives an exemption from estate tax, at the federal level, for the first $5.45 million dollars. Hillary’s plan cuts that to $3.5 million (still a large number, but moving in the wrong direction). She also proposes to increase the rate from 40% to 45%.
As for income tax, Ms. Clinton targets the rich – those with incomes above $750,000. It is estimated that if you are in the top 1% of tax payers, your tax bill will rise $78,000. However, under Ms. Clinton’s plan, those who earn less than $300,000 will face no increase. You can see the Tax Policy Center for more details.
Elections create change. Some for the better, some not so much. However, with the right advice and proper estate planning, these and other future changes may have minimal effects. But the key thing is to sit down with one of our attorneys to have your plan reviewed to ensure it works for you, and mitigates future changes.
Next week, I will be writing on Donald Trump’s tax plan.
Contributed by Morris Hall, PLLC and Last Cruces Estate Planning Attorney and Partner, James P. Plitz.
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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