Will they? Or won’t they? Repealing the federal estate tax has been a question on advisors’ minds for nearly a decade. It’s back on the table again as the Senate mulls over a possible repeal amid all the deal making on Capitol Hill.

In 2015, the House passed a repeal bill with seven Democrats voting yes and three Republicans opposing. President Donald Trump campaigned in 2016 on the issue, promising to get the tax repealed.

However, the latest resistance to the current proposed repeal in the Senate is coming from within the President’s own party, according to a recent post by Fox Business.

The tax was temporarily repealed in early 2010 when members of Congress failed to put in a one-year stop gap. Lawmakers brought it back in a compromise with then President Barack Obama, and the estate tax resumed at 35 percent for two years.

Since then, the rate has risen to 40 percent and applies to estates valued at more than $5.49 million per person or $10.98 million per married couple. Annually, the tax is levied on about 5,500 estates.

Nothing is Certain

An estate tax repeal could reduce the federal revenue by about $239 billion over a decade, according to the Tax Policy Center.

Republicans hold 52 seats out of 100 in the Senate. Preserving the estate tax might be a concession they are willing to give to Democrats in order to garner votes for other items inside a larger tax reform package.

Increases in the exemption level during the terms of Presidents George W. Bush and Barack Obama have meant that fewer and fewer estates were required to pay it. This year, Fox Business reported, an estimated 0.2 percent of Americans who die will have a taxable estate. In 2008, 0.7 percent had taxable estates. In 2000, 2.2 percent did.

Many of you use estate planning strategies and charitable donations to reduce or eliminate tax. However, if you have an illiquid business you may still be at risk, which is why some Republicans are proposing doubling or tripling the current exemption level to $20 million or $30 million per couple.

3 Advisor Approaches 

For advisors, this is a crucial time of the year. Some folks may be confused by all the news coming out of Washington D.C. and how it will affect their tax planning. Let the Law Offices of Gary R. Waitzman help you find the best planning options available, to protect the legacy you’ve built for your family.

Options on handling the repeal include:

•    Education – which is essentially educating folks on what a repeal means

•    Unsure What to Do – Some advisors wonder if they should bother to learn about the effects of the proposed repeal because Congress may vote to keep the tax.  This is not the approach being taken by the Law Offices of Gary R. Waitzman.

•    Wait and See – Some advisors are taking a “let’s just be patient” approach to the whole thing. Folks are being educated but estate plans remain untouched/modified.

The Law Offices of Gary R. Waitzman is taking a pro-active approach.  Clients are being educated and depending on whether you are or are not at risk based on your individual circumstances, a partner approach is being taken on the best path forward.  It’s important to help you understand the complexity of the tax laws so that your money ends up where you want it.  We’ll help you review your planning documents and advise whether documents should be updated and we’ll also make sure you understand all the actions that require consideration so everything works out for the best.

Contact Gary to find out more detail – by phone @ 847.719.1300 or click here to contact via web form.

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