For the wealthy, estate planning is extremely important because transferring assets to heirs can bring tax burdens. And, with new administrations often comes new taxes, and a recent tax plan is no exception.
American Families Plan
The new administration has proposed the American Families Plan, which would substantially change how much taxes are owed for wealth transfers. Specifically, according to the Tax Foundation, a tax policy research group, the American Families Plan creates a combined tax rate that would be the highest in nearly 100 years: a 61 percent tax rate.
Specifically, according to that tax policy research group, the new plan will combine the estate tax with a doubling of the capital gains tax, along with eliminating the step-up tax benefit. This results in about a 61 percent inherited wealth tax for the wealthiest of the wealthy.
Chances of becoming law
The question probably bouncing around our readers minds is whether the American Families Plan has any chance of becoming law. Unfortunately, the answer to that question is unknown due to the current make up of Congress. With a 50/50 split that includes moderate Democrats from red states, it is unclear whether the American Families Plan has any chance of landing on the President’s desk.
Why does it matter?
Well, for those of us outside the 1 percent, the tax plan may not mean much. But, for wealthy Las Vegas, Nevada, the potential doubling of the capital gains tax can have a huge affect on one’s estate plan. This is why it is so important to speak with one’s estate planning attorney at least once a year to ensure that one’s plan is up-to-date, legally enforceable and still the most effective plan for our current economic climate.