WILL THE ESTATE TAX DIE?
Happy birthday estate tax! According Strategies for Playing Trump’s New Estate-Tax Plans in the Wall Street Journal, the American estate tax is 100 years old. And unfortunately, the estate tax has aged and changed, and some analysts and politicians want it dead. President-elect Donald Trump and other Republican legislators propose to end the estate tax. While only a small percentage of people actually pay any estate tax (thanks high levels of the estate tax exemption), it surfaces regularly in discussions about tax reform. Usually estate tax reform surfaces as a topic of discussion with its sister, the gift tax. If the estate tax is reformed or dies, the gift tax will also be facing many changes. Some of those changes may result in an increase in capital gain taxes.
The estate tax has proven to be more resilient than many people like. However, the political landscape has changed rather drastically and will have seen stranger things than the death of the estate tax (and changes to the gift tax). Even so, we don’t think the estate tax will go away easily. Conservative planning favors the prepared. We recommend planning under the current law and regular updates to your estate plan.