Post-Election Tax Planning for High-Net-Worth Taxpayers

Experienced Estate Planning Lawyers Assisting with Tax Planning and Asset Protection in Houston

The dust has almost settled. On December 19, 2016, the electors who make up the Electoral College cast their votes for President. On January 20, 2017, Donald Trump will be inaugurated as the 45th President of the United States. While the President-elect is busy considering who will serve in his cabinet, many are looking at the tea leaves as they try to anticipate how the new president’s administration will differ from that of President Obama, particularly with regard to tax policy.

Quite a few experts posit that various forms of tax reform will be among the first changes made. At this early date, can we anticipate what sort of post-election tax planning might be in order for high-net-worth taxpayers? Here follows a list of some possible changes that may have the greatest impact on individual taxpayers.

Death Tax Repeal

The President-elect has signaled that he wants to preside over a repeal of the federal estate tax. What is less clear is whether there would be a concomitant repeal of the gift and generation-skipping tax provisions that are joined at the hip with the estate tax. A plan pushed forward by House Republicans would eliminate the estate and generation-skipping transfer tax, but it has no provisions regarding the gift tax. For the time being, taxpayers may want to continue to implement estate planning strategies that do not have a significant risk of attracting a gift tax.

Taxation of Unrealized Appreciation at or After Death

President-elect Trump’s tax plan lacks clarity with regard to taxation on unrealized appreciation. Several Trump advisors indicate that capital gains held until death would be subject to tax only to the extent that they exceed $10 million. The status of the “step up” basis as of the date of death is unclear.

Cap on Itemized Deductions

The President-elect’s plan would limit an individual’s itemized deductions to an annual $100,000 amount ($200,000 for joint returns). Tax experts note that such a limitation would restrict the use of the charitable deduction. The House Republicans’ proposal eliminates all itemized deductions other than the deduction for home mortgage interest and charitable gifts. Those who plan on making large charitable donations over the next several years may want to consider accelerating those gifts into 2016.

Sharp Pencils May Be Required in the Year Ahead

Texas BarToday Top Ten BadgeAs many tax advisors say, if you base your planning on the patterns you see in tea leaves, you deserve whatever happens. A sharp pencil and a clear mind promise better results in times of uncertainty. Caution and careful planning appear to be in order as we move from a period of absolute gridlock in Washington to a point where some tax reform legislation may actually be passed and signed into law. Don’t be reactive; be proactive. Align yourself with a group of proven experts in the field of estate planning, wealth management, and tax-oriented planning.

The attorneys at Romano & Sumner have more than 20 years of combined experience providing expert legal assistance to clients in all types of complex wealth management, tax planning, and asset preservation issues. At Romano & Sumner, we pride ourselves not only upon our professionalism, but also 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.

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    Romano & Sumner, PLLC

    Romano & Sumner, PLLC