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4 Possible Estate Planning Issue Changes for 2021

4 Possible Estate Planning Issue Changes for 2021

By Solid Serenity Legal Solutions

With each new U.S. President, comes uncertainty in tax and estate planning laws. Our new administration is no different.

Here are 4 possible estate planning issue changes for 2021 that may happen under our new administration.

(1) Changes to the Federal Estate Tax and Gift Tax Exemptions

The exemptions currently in place are scheduled to rollback in 2025. These changes will only take place faster if the administration decides to place priority on the changes.

With the pandemic, economy, and other pressing issues plaguing the new administration, experts agree changes to the Federal estate tax and gift tax exemptions likely won’t occur before 2022.

The current estate tax exemption is about $11.7 million per person. And, the current gift tax exemption is $15,000 per person per year. Any gifts given above the $15,000 amount per person, will be deducted from the overall estate tax exemption. If you are a high net worth individual, you should consider locking in this high exemption amount with gifts this year.

(2) Changes to Oklahoma Estate Tax Exemption

Oklahoma currently does not have an estate tax and hasn’t for many years. Though the legislature could change this law at any time, it is unlikely. So, Oklahoma’s estate tax exemption will likely remain in place.

(3) Low Interest Rates

The pandemic brought with it historically low interest rates. These low rates allow high net worth individuals some creativity in their estate plans. From family loans, to gifts and sales to Trusts, families have some interesting estate planning opportunities in 2021. And, there is no indication interest rates will rise suddenly this year. So, now is a great time to take advantage of these opportunities.

(4) Changes to Federal Tax Laws that Impact Capital Gains

The current capital gains tax rate is 20%. Some experts believe the current administration may seek to raise the amount of taxes on capital gains.

Experts also believe the current administration may seek to eliminate the “step up” basis for estates. A step up basis basically gets rid of the capital gains taxes an heir would pay on property left to them after a loved one dies.

Several administrations have looked into eliminating the step up in basis for estates. However, realistically, tracking the basis of property acquired many years prior is difficult. So, the change never gained much traction. Because of this, it is unlikely any proposed changes to step up basis would take hold in 2021 either.

Schedule an appointment online to set up your estate plan to protect your family and defend your assets.

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