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Estate Planning NOW: Preparing for a New Government

Gift Tax, Trusts & Estate Planning Attorney

by Kira S. Masteller

It’s impossible to predict what any future president will do, or what Congress will approve. But in light of comments president-elect Donald J. Trump made on the campaign trail, and given that Grand Old Party members will have a majority in both houses of Congress – certain factors in estate and succession planning should be considered.

Estate Planning for Tax Reform

Trump has promised what he calls A Pro-Growth Tax Plan, designed to reduce taxes for many groups of taxpayers.

In broad strokes, the president-elect has promised lower taxes for businesses and low to middle-income families with children. The plan also promises to close special interest loopholes, repeal estate taxes (which generates a hefty 40 percent in federal income from single taxpayer estates worth $5.45M or more; $10.9M for married couples), and reduce tax brackets down to three from seven, according to Motley Fool.

If we combine Trump's and the GOP's 2015 tax reformation plans, the changes could include the broader goals above, and: 

  • Increase standard deduction amounts from $6.3K to $12K for single tax payers; and $12.6K to $24K for married couples;

  • Eliminate personal exemptions;

  • Cap itemized deductions at $100K (single), $200K (married), which could put a damper on reaping the current benefits of charitable contributions (more information on that below);

  • Repeal AMT (alternative minimum tax);

  • Repeal NIIT (net investment income tax); and

  • Repeal generation-skipping transfer taxes.

Mortgage interest deductions and charitable contribution deductions would remain under the GOP plan, but changes may be imminent.

Estate Planning for a Trump Presidency

We looked at the broader strokes above. But here are some considerations to make for the immediate future.

Trump Tax ReformCharitable Contributions: Make them now, just in case. The GOP opted to keep them, but Trump wants to "disallow" them. Currently, you can deduct up to 50 percent of your adjusted gross income when giving cash – and anything above 50 percent can be carried forward over the next five years.

Death Tax: If the federal estate tax is repealed, those with significant assets may not need to reduce the size of their estates.

Capital Gains: On the other hand, the president-elect's tax plan would levy fees on capital gains at death if they are worth more than $5M (single) or $10M (married).

Business Planning: Now may not be the time to sell business interests. Currently, income generated from those sales is taxed at over 43 percent. But if the Trump tax reformations go into effect, the tax rate could come down to 33 percent.

Again, none of us can predict what will happen should tax reforms be enacted under a Trump presidency. The main things to remember now are that charitable contributions may be worth making in 2016, and that it may be best to hold off on selling businesses for the moment. 


Kira S. Masteller is a Shareholder in our Trusts & Estate Planning Practice Group. 

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