Trump Will Kill The Estate Tax – Why Does This Matter To You?

Donald Trump has promised to repeal the estate tax. Why does this matter? Well, it really may not matter…for that matter. For the few taxpayers who expect to pay the estate tax, they no longer will have to create tax-exempt organizations to eliminate large sources of tax revenue. For the remainder, it really won’t matter. What will matter is what type of tax rules and regulations replace it.

Currently, the estate tax really affects only a few estates. Less than 5,000 estates paid $17 billion in estate taxes in 2015. 266 of these estates were worth $50 million and paid a total of $7.4 billion, almost half of the total amount in 2015. Taxable estates pay a tax rate of 40%. The assets of many wealthy estates are passed to heirs who may receive a “stepped up basis” allowing capital gains to avoid tax.

The estate tax is hardly a big money maker for the federal government as it brought in than 1% of federal revenue in 2015. Congress reports that the income tax lost because of step-ups in basis on capital gains exceeds estate tax revenue. Congress currently supports estate tax repeal and the stepped-up basis rules.

Now that it’s 2017, the estate and gift tax exemption is $5.49 million per individual, an increase from $5.45 million in 2016. A taxpayer may leave $5.49 million in assets to heirs without any federal estate or gift tax liability. Surviving spouses may carry over each other’s unused exemptions, allowing a couple to exempt $10.98 million in taxes.

Trump’s tax plan would replace the estate tax and impose a capital gains tax on assets left to heirs above a $10 million threshold, which would typically impose a tax of 20% instead of 40%. Contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives would be disallowed to prevent any fraud and abuse. Until Trump repeals the estate tax, the federal estate tax exemption will continue to annually increase.

If you are an individual or business in the New York or Tri-State area and have any question about estate taxes, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.Trump Will Kill The Estate Tax – Why Does This Matter To You?

Leave a Reply

Your email address will not be published. Required fields are marked *

Testimonials

Categories