By now, most of you have heard that President-elect Trump is proposing to repeal the federal estate and gift tax. With a Republican-controlled Congress, comprehensive tax reform is quite possible. However, what new tax laws will actually be passed, and what the specifics of any such tax laws would look like, is anything but certain.
For example, if the estate and gift tax is repealed during a Trump administration, when would it occur? Would it be effective immediately, or would it take effect, gradually, over a period of years? What if only the estate tax, but not the gift tax is repealed? If there is no estate tax at death, there would likely be no more step-up in basis for appreciated assets, and how would carryover basis be implemented? What if the repealed estate tax is reinstated in the future? Recall the attempt at estate tax repeal instituted during the George W. Bush administration, which led to only a single year of tax repeal in 2010, followed by the resumption of the estate tax for decedents in 2011 and future years. Finally, would Illinois follow the federal government and repeal its state estate tax? If not, then Illinois residents still be subject to estate tax if the value of their estate exceeds the exemption amount.
Because there is so much uncertainty as to whether federal estate and gift tax repeal will happen and, if it does, what form it will take, you cannot put off estate planning and just ‘wait and see’. Further, under current law, the federal estate tax exemption is $5.45 million (increasing to $5.49 million for 2017). Thus, most Americans will not have a federally taxable estate even if the federal estate and gift tax is not repealed.
Estate and gift tax aside, there is too much at stake for you to not do your estate plan at this time. You still need to consider who will administer your estate at your death, how your assets will be distributed at your death, and who will manage any trusts for your spouse, your children, or other beneficiaries to provide some asset protection for them. If you have minor children, you need to appoint guardians and set up trusts to hold assets for them until they are adults. Disability is always a possibility for any of us, and careful planning now can make your life, and the lives of your family members, much easier in the event you become incapacitated.
Don’t wait around to see what happens in Congress. Talk to the estate planning attorneys at Waltz, Palmer & Dawson, LLC and create an estate plan, or review and update your existing estate plan, to be sure that your wishes will be carried out in the event of your death or disability. Please contact our office at (847) 253-8800 to schedule a no-charge initial consultation.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
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