The estate tax has been around for a long time – it was originally enacted in 1916 to help pay for World War I. Since then, it has often imposed an end-of-life tax liability for those families who have accumulated significant wealth, Businesses have been built by lawyers and accountants to provide strategies to help these families avoid the specter of transferring 40% or more of their assets to the federal government, rather than to their families. This may be about to change.
President-elect Trump and the incoming Republican Congress are expected to work in concert to repeal the estate tax, possibly in the very near future. While their proposed plans are not fully fleshed out, and they differ slightly in details, expectations for a repeal of the estate tax fall into the “highly likely” category. Of course, with politics (as we’ve recently seen) nothing is certain.
The possibility of repeal should give pause to any planning until the smoke clears and we know if changes will occur. Any year end gifts which would be subject to payment of gift tax should likely be delayed. There’s no reason to pay a tax this year which might not be payable next year if the law is repealed. This delay need not apply to gifts which are exempt from the gift tax under the annual exclusion amount of $14,000 per donee.
Please contact us if you have any questions or comments about your estate planning or if we can help you prepare for this possible change. Click this link to access Laura Sanders’ Wall Street Journal story for a further discussion.
Horizon Advisors is a Houston based fee-only wealth management and financial planning firm. Horizon specializes in helping successful individuals and families understand, organize, and manage their often complex financial situations. Horizon offers integrated financial planning and investment management services.