Estate Planning Lawyers Discuss Repeal of Federal Estate Tax in Texas
While recent news reports from our nation’s capital have tended to concentrate on alleged Russian election interference, the firing of FBI Director Comey, and other hot-button political issues, Texas residents that have significant net worth should have been pleased by an April 2017 White House announcement that the president is pushing for a repeal of the federal estate (aka “death”) tax. While specific legislation to repeal the tax has not yet been introduced—much less passed and signed into law—estate planning attorneys have already recognized that many wills and trusts currently in place will need to be modified to take advantage of any changes in the law.
What Type of Changes Might Occur in 2017?
While there are almost as many opinions as prognosticators, proposals for tax change in 2017 include some of the following:
- Repeal of the estate, gift, and generation-skipping transfer taxes
- Repeal of only the estate tax
- Imposition of a “capital gains” tax at death (somewhat like the Canadian model) in lieu of the existing estate tax
Why Would Changes in Current Wills Be Necessary?
Should any significant change be made to the federal estate, gift, or generation-skipping tax schemes, many high net worth Texans might need to modify their existing estate plans. That is because many current wills and trust documents are specifically geared to existing law. Many have clauses that take into consideration, for example, the current estate tax exemption amount. Many have language that carefully maximize available marital trust deductions. Others have trust provisions that are carefully crafted to avoid or at least minimize the generation-skipping tax.
Opposition to Estate Tax Repeal
Of course, not everyone in Washington, D.C. is in favor of a repeal. Indeed, last year several members of Congress within the “loyal opposition” introduced the so-called “Sensible Estate Tax Act of 2016.” Many conservators yelped that the proposal was anything but sensible since it would have reduced the estate tax exemption to $3.5 million and would have raised the estate tax rate to 45%. While not within the bill itself, other Democrats have sought to repeal the provision in the existing tax law that allows a basis step up, for income tax purposes, for inherited property.
How Would Repeal or Modification Affect You?
Tax experts point out that the first step in determining how proposed changes in tax law would affect you is to understand where you stand today, before any legislative modifications. Have you considered how your property would be distributed at your death? Have you made adequate allowance for your children and spouse? Have you considered how your insurance plan might be modified to provide flexibility and control?
Romano & Sumner: Skilled Attorneys That Think Outside the Box
The attorneys at Romano & Sumner have more than 20 years of combined experience providing expert legal assistance to clients in all types of straightforward and complex tax matters. We provide tax planning, business planning—including succession planning—and wealth management advice. At Romano & Sumner, we pride ourselves not only on our professionalism, but upon our client service. We know that each situation is unique. We return phone calls within one business day. We keep clients informed. We complete the work within the allotted time frame. Call us at 281–242–0995 or complete our online contact form.