Trends and Concerns for Estate Plans—What’s the Forecast and/or Outlook?

Not surprisingly, the current makeup of Congress is out to “tax the rich.”   There are a number of proposals in draft legislation which could have dramatic implications for existing estate plans.  Moreover, even though we don’t know what the exact final version of this legislation will be, these measures are so drastic and so catastrophic to formerly solid plans that if you think you might have implications you should seek immediate advice and cover.   The effective date is currently January 2022 for some of the proposed legislation, but some rule changes will be effective on enactment.

For example, consider the proposed legislation named the Sensible Taxation and Equity Promotion (STEP) Act, which is sponsored by Senators Chris Van Hollen, Cory Booker, Bernie Sanders, Sheldon Whitehouse and Elizabeth Warren. This legislation would tax unrealized capital gains on your inheritance. It also has some special rules for trusts that are geared to get around common tax-planning techniques, so that those moneys get taxed, too. It also eliminates carry-over basis for gifts except for spouses and charities.

These provisions would be a killer tax on inheritances, trusts and gifts. It will also exponentially increase the burden that executors, trustees and just regular folks will face to gather the basis information, obtain appraisals and file the required tax returns. It is difficult enough for someone to keep their own records – can you imagine what an executor or trustee would have to go through to get purchase documents for assets purchased by the decedent decades ago?

We expect this legislation and others like it might just pass without much publicity.  There is quite simply too many other pressing topics taking up time and space.   If you think you might be impacted by this or other legislation, give us a call and check in.   Otherwise please know that we are gearing up to help future executors and trustees as they struggle to comply with the law.