By: Thomas Law Group On: March 22, 2021 In: Estate Planning Comments: 0

The recent presidential election and resulting change in the country’s administration, brings the possibility of change to the Federal tax laws. Proposals circulated prior to the election included changes to the Federal estate tax laws as to both tax rates and the unified credit or exemption for each taxpayer. Currently, taxpayers have the benefit of a lowered tax rate for estates and trusts and a unified credit of over $11 Million per person, which may be the highest it has ever been. This has enabled most taxpayers to transfer wealth to the next generation without Federal estate taxation and, as a result, estate planning had shifted away from concerns about estate tax. This, coupled with the elimination of Ohio’s estate tax on January 1, 2013, created an environment for Ohio residents where most did not have taxable estates upon their deaths.

The proposals for change have included possible rate increases to include the top tax rate at 45{a8fb0cc56c3af9d3ff26426aee10be724886936b5f4662d1260191260e82f81d} and the reduction of the individual lifetime exemption amount currently at $11.5 Million per person, back to exemption amounts of the early 2000s of $5 Million per person ($10 Million per married couple) or $3.5 Million per person ($7 Million per married couple) or potentially less. Also discussed, but perhaps a bit more speculative, is the reduction of the stepped-up basis on death and a tax on unrealized gain on death. The consequence of such changes will result in more taxable estates upon the death of taxpayers unless sufficient estate planning is done to mitigate this result.

The attorneys at Thomas Law Group are following these developments and will be ready to assist you to review and revise your current estate plan in order to reduce the impact of any changes to the estate tax or associated taxes.