In recent months, many proposed changes to estate tax laws are becoming a large focus for many individuals. With discussion both for and against the implications of these tax changes, individuals are quickly learning about the changes that could affect them financially. While there will not be any drastic changes in the near future, it is important to research and understand the reasoning behind these propositions. Here, the estate planning attorney Douglas C. Lauenstein discusses the potential of a new estate tax law for those with high annual income and how that may affect the American population.
Wealthy Americans May Be Subject to a Higher Tax
Certain individuals are pushing for more progressive tax laws. This includes options for a potential tax of 2% annually for individuals with an income of $50 million or more in net worth, and a 3% annual tax on those with over $1 billion in assets. Other potential changes to the estate tax include ideas for up to a 77% top tax rate for individuals with $1 billion or more in assets, which has not been since the 1970s. These tax changes are targeting some of the wealthiest individuals in the nation in an effort to bring proposed wealth equality among varying income brackets.
How This Differs From the Current Estate Tax
These potential estate tax changes differ from the current estate tax in myriad ways. The current top tax rate is 40%, which applies to individuals or families leaving behind around $13 million or more in assets. Furthermore, there is a connection to the lifetime gift tax exemption that relates to estate taxes. The lifetime gift tax exemption allows for individuals to gift a total of $11.58 million currently before that money can be taxed. After an individual reaches this limit, the remaining money that is gifted is subject to the corresponding federal tax rates. Some individuals have chosen to use their lifetime gift tax exclusion before their passing in order to allow for those gifts to grow interest for their heirs.
What to Consider With Your Asset Management
With such a drastic proposed change to the estate tax, it is important to speak with a qualified attorney, such as Douglas C. Lauenstein, about the process of estate planning. With the possibility of large changes coming as soon as late 2020 or early 2021, it is vital to be proactive in your estate planning process to ensure that your wishes are properly met. After evaluating your assets in their entirety, consider what you may be able to gift. This prevents them from being heavily taxed and in turn, allows them to grow in your children’s estates. If you have additional income that can be spent on charitable donations, consider researching charities that you have an emotional tie to, and consider making donations in the near future. Finally, it is important to be prepared, but also remain realistic. While the landscape of the estate tax may change, those changes may not be as drastic as outlined. Prepare, contemplate and discuss all paths of handling your estate with a professional to keep your assets secure.
Speak To Maryland Attorney Douglas C. Lauenstein To Learn More
Estate planning can be very confusing, and when coupled with taxes, can become overwhelming. At the Law Offices of Douglas C. Lauenstein, qualified attorney Douglas C. Lauenstein works with you and your loved ones to navigate the complex and fluctuating tax environment and ultimately make the best decisions for you and your heirs. To learn more about how attorney Douglas C. Lauenstein can help you with your estate plan and other important documents, contact our office today.