Biden Estate Tax Plan could increase the estate tax but it might not matter to you
- Are you wondering what a President Biden's administration means to your estate plan? Well, by the end of today's video, you might, emphasis on the might, have a better idea.
Yesterday, we released our annual video on the federal estate tax exemption, which traditionally goes up every single year with inflation. As you know from watching our video yesterday, the gift tax exclusion remains the same at $15,000 but the federal estate tax exemption increased to $11.7 million per individual this year, or $23.4 million for a married couple.
We do not know for certain, but President Biden, during the transition, discussed the possibility of decreasing the federalist state tax exemption amount from the 11.7 million to $5 million per individual, which should be, still, $10 million for a married couple. There's even been some talk that he might reduce the federal estate tax exemption even more to around three and a half million dollars per person, which would still be $7 million for a married couple.
Even at that, these numbers are still huge. Most likely, this will be indexed to inflation, as has been the norm for, well, several years, almost forever. Wait. There is more. All of this could also include an increase in the estate tax from 40% to 45%. The general word on the street is that president Biden does not support a wealth tax.
However, there has been talk that he might repeal the stepped-up basis on death, and consequently, the tax on unrealized capital gains at death. At the beginning of this video, I said, "You might have any better idea on what a president Biden's administration means to your estate plan," and I emphasized might, because the truth is, nobody knows.
Even with the same party in the White House, and in Congress, any changes to the tax law are going to have some serious debate, and some serious compromise for anybody to get where they want to. As I said yesterday, even if the federal estate tax exemption is reduced to the $3 million range, it will still only affect a very, very small percentage of Americans.
Whether the president's plan will have an effect on your estate plan, well, it remains to be seen. So, stay tuned. Just like you always do, make certain to meet with your tax professional and your estate planning attorney for your annual estate planning checkup.
Like you've heard me say in all of these videos, your estate plan must continue to evolve as your life does. I know I've thrown a lot at you today, so that's why we've prepared our free guide on estate planning. I'll put a link to it in the description below, and in the comment section below that, so that you can download it and get started in the right direction, and, to help you out even more, watch this video up here and this video up here.
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