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Potential Estate and Tax Issues from Trump Administration

Posted on: December 12th, 2016
trump tax proposalPresident-elect Donald Trump is expected to tackle several tax matters when he takes office in January 2017. Many Americans may need to adjust their tax planning efforts as a result. While annual reviews help to identify potential tax consequences, at times it is most favorable to maintain more frequent reviews with a tax attorney. The inauguration of a new president, whose platform may contemplate extensive changes to tax legislation, is one of those times.

Over the summer as election season neared its end, TrustCounsel’s tax attorneys outlined the Presidential candidates’ estate tax proposals. Trump’s proposal calls for an elimination of the estate tax, which remains unchanged as of this writing. However, his initial plan had greater tax cuts in other areas than the current tax proposal

President-elect Trump and a majority Republican Congress suggests tax cuts are forthcoming. Financial analysts and media speculation anticipate these tax changes will occur quickly, with forecasts predicting that a potential federal tax code reform under the Trump Administration might be implemented during his first 100 days in office. Proposed changes include:
  • Repeal of the federal estate tax. A full estate tax repeal does not necessarily mean that an individual’s estate will pass free and clear to surviving family. President-elect Trump’s proposal also includes a capital gains tax at death with an exemption of $5 million (or $10 million for married couples). Family farms and small businesses would be exempt.
  • Income tax (personal and business) reduction. This would include individual rate brackets of 12, 25, and 33 percent. The proposal also calls for a reduction of the corporate income tax to 15 percent, which represents a drop of more than half, and extending the rate to businesses that do not operate as corporations.
  • Repeal of 3.8 percent net investment income tax (NIIT)
  • Increase in standard deductions and a cap on itemized deductions
  • Repeal of personal exemptions and alternative minimum tax (AMT) (individual and corporate)
  • Repeal every Obamacare-related tax. Pending clarification in the coming months, this may include repeal of the penalty uninsured taxpayers currently pay.

Many tax plans implement trusts and estate planning tools to help mitigate the impact of the estate tax. If the estate tax is repealed and a capital gains tax is added, plans may need to be adjusted.

Schedule time to discuss an optimal strategy with a tax attorney, and subscribe to our tax law blog to receive legislative updates as they happen.
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