CLIENT UPDATE: UPCOMING CHANGES IN TAX LAW THAT COULD AFFECT YOUR ESTATE PLAN

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In September, the House of Representatives published proposed changes to tax laws and regulations. If your estate is currently valued at more than $5.5 million (for individuals) or $11 million (for married couples) or if you’re considering setting up a trust, we may recommend that you act before the end of the year because of some of the proposed changes.

What has happened:

• We expect changes in the laws and regulations that affect how estates are taxed to go into effect on January 1st, 2022.

• This is part of the budget reconciliation bill that Congress may pass before the end of the year.

While nothing is final, there are a few items that are likely to affect our clients:

• The federal estate tax exemption may be cut in half, to $5.5 million for individuals and $11 million for married couples, effective January 1st.

• Grantor trusts may be included in a decedent’s taxable estate when the decedent is deemed to be the owner of the trusts, effective for trusts established or transfers made after December 31st.

So far, no change has been proposed to the step-up in basis upon death.

We expect additional changes to the proposed legislation and will provide more information when it becomes available.