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People often are not aware that estate plans need to be reviewed and updated on occasion. Putting an estate plan is an important thing to do, but it is not a set it and forget it kind of thing. As your life changes, circumstances change, and laws change, so should you consider updating your estate plan to reflect such changes. This will help ensure your estate plan most accurately reflects and protects your goals for yourself and the future. Every so often, a significant change in the law looms and has the potential to have significant impacts on estate plans. Recently, a piece of legislation was proposed by Bernie Sanders that could have huge implications for certain Americans by making substantial changes to the estate tax. Read on to find out more.
Have You Heard of the Estate Tax Changes Proposed by Bernie Sanders?
Back in March, Senator Bernie Sanders proposed a piece of legislation named the “For the 99.5% Act.” It was named such because the changes in the legislation would impact the wealthiest 0.5% of Americans. If passed, the act would reduce the estate tax exemption that was previously increased significantly by the Trump Administration. The reduction in the estate tax exemption would bring it back down to the level it rested at in 2009, which would be $3.5 million per individual and $7 million for married couples. The current exemptions now are much higher as they are $11.7 million per individual and $23.4 million for married couples. Furthermore, if passed, the legislation would not go into effect until January 1, 2022.
Those with an estate that fall over the exemption amounts are subject to estate taxes. While the current estate tax rate sits at 40%, the For the 99.5% Act would increase the rate to 45% and it would incrementally increase based on the value of the estate. For instance, estates subject to the tax that exceed $10 million in value would be taxed at 50% while those valuing over $50 million would be taxed at 55%, and those valued at over $1 billion would be taxed at 65%. These rates would also apply to gift taxes and the gift tax exemption would be reduced to $1 million.
It is important to note that, right now, this is just proposed legislation. There is no guarantee that it will be enacted. It is, however, important to be aware of these kinds of potential changes. Should this legislation go through and could impact you, it could impact your estate in a big way. Now is the time to explore your options for maneuvering your estate plans accordingly.
Estate Planning Attorneys
To evaluate your estate plans in light of changes in law, potential changes in law, or changes in your life circumstances, talk to the trusted estate planning team at Merlino & Gonzalez. We can review your estate plan to see if any changes need to be made to help ensure that your estate plan remains most effective in preserving your wealth and protecting your goals. Contact us today.