by Randy Fox
Planning for Potential Tax Changes
Attorneys Martin Shenkman, Jonathan Blattmachr, et al aired a webinar recently on year end planning in light of the upcoming 2020 presidential elections. During their presentation they focused heavily on the Bernie Sanders (and therefore Democrat) tax proposals that may be enacted should there be a change in administration or a change n the balance of power in Congress. While I’m not political by nature, I will say that if you make your living offering advice in estate and wealth transfer as I do, the webinar frightened the heck out of me. And it would frighten the heck out of any affluent American family. Much of the proposals are things we’ve heard before as they are from President Obama’s Green Book.
Some highlights. Or lowlights in planning ahead:
First, reduced exemptions. Back to $3.5 Million per person, though with portability for husband and wife.
Second, Generation skipping tax would be applied to all trusts every fifty years. This would effectively end dynasty trusts.
Third, Annual gifts back to $10,000 per recipient but more importantly aggregate annual gifts limited to $20,000. Good luck with large life insurance Crummey gifts.
Fourth, GRATS minimum length of ten years and can’t be zeroed out
Fifth, Grantor trusts to be included in estate at death of grantor. Goodbye sale to defective trusts.
The bad news continues through almost every planning method that you would consider. Except for charitable planning, not much is left to transfer wealth without sending a good portion to the Treasury.
If there is good news, it is that charitable planning, used creatively, may be our safe harbor. And, of course, there hasn’t been an election or a change in the balance of power. Hopefully the voting public will be well informed on ALL of the issues before the ballots hit the box.
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