Looming Changes to the Estate Tax Under President-Elect Trump

By Jory S. Stern
January 16, 2017


Expect the unexpected. That should be the plan moving forward.

The US Federal Estate Tax Exemption has risen annually since its confirmation under the American Taxpayer Relief Act of 2012. This year the estate tax exemption stands at $5.49 million USD per U.S. person.

According to President-Elect Trump’s website:

The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. To prevent abuse, contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed.

This policy does nothing more than to confuse political analysts as it is impossible to determine how President-Elect Trump will proceed with this plan. Will the entire estate tax regime be collapsed? What will happen to assets with Capital Gains in excess of $10 million USD?

Prudent estate planning must be based on the law, as it exists today, while maintaining an eye towards the future. Given the uncertainty inherent in President-elect Trump’s unpredictable style, U.S. persons and non-U.S. persons with U.S.-situated assets and beneficiaries will need to keep abreast of any changes in U.S. law.

Although the future is uncertain, proper estate planning can mitigate any potential changes to the estate tax regime. Even if the entire estate tax is repealed, an estate or assets valued in the millions can benefit from proper estate planning structures. Avoidance of probate, which can be burdensome on families in time, effort and money being spent to settle a U.S. estate, incapacity, creditor protection and proper distribution of an estate upon a decedents passing can be accomplished while providing for changes in the estate tax law. Although we cannot predict how President-Elect Trump will act or when he will act, we can certainly plan for the unexpected.

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