Three Estate Planning Proposals to Watch
House Democrats recently released additional legislative proposals that, if passed, would affect several commonly used estate planning techniques. Among those proposals are three that would significantly impact some of the more common wealth transfer strategies. It is too early to tell whether this legislation has any chance of passing, but clients who are planning to use strategies that would be affected by these changes should watch carefully for future developments.
Proposed changes include:
At this stage, these are just proposals and there is no certainty about whether these proposals will become law, or if so, in what form. In reviewing these proposals, it is interesting to note the prior proposals that were not included. Specifically, this proposal does not include reducing the exemption to $3.5M, does not change the step up and gain recognition rules for assets held at death, does not decouple the estate and gift tax exemptions, does not reduce the gift tax exemption to $1M, and does not contain estate tax changes that would be retroactive. It is too soon to know for sure, but it is possible that the lack of these changes in current proposals might give some indication that those changes might not be moving forward.
There is no telling whether these proposals will ultimately become law, but clients with pending plans to use these strategies should watch future developments carefully and might want to consider completing pending transactions to take advantage of the current law and minimize the risk that changes in the law will affect their plans.
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
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