We know that Biden has taken charge of the office, and numerous crucial tax changes are likely to happen that will impact your estate planning. It is, however, difficult to analyze the potential consequences of these changes.
One thing you can do is to get yourself prepared to form an efficient estate plan. Here is everything you need to know about the two new tax changes likely to occur shortly, I.e., reduction in the state tax exemption and elimination of the basic step-up for inherited property.
How to Get Prepared for the Elimination of Basis Step-Up for Inherited Property?
Biden administration intends to eliminate the basis step-up rule. Now, if you are not aware, at a time a person would pass away, the base of value for the assets would step up. And the concerned parties or the heirs were usually able to avoid capital gains taxes on the property. However, the case won’t be the same now. The concerned parties would be made to pay capital gains taxes because the gain will be recognized.
Now here is what you can do. You can place your assets in a trust and can directly gift the assets to loved ones. Also, utilize the available strategies to make the most out of higher estate and gift tax exemptions before they are lowered.
How to Get Prepared for the Reduction in the State Tax Exemptions?
Another change that scheduled at the beginning of 2026 but is expected to come our way sooner. According to the Tax Cuts and Job Acts of 2017, any transfer of assets above the threshold of $10 million is subjected to a 40% tax rate. It is said that the amount is about to be reduced to $6 million or even $3 million.
You can consider asset transfers before the implementation of change to make the most out of the high tax threshold.
Moreover, if you want further information, contact us right away. At Keystone Asset Protection and Estate Planning, we would be more than delighted to provide our services so that you can protect your assets and preserve your hard work.