How Estate Tax Changes Could Affect You and Your Family
Updated: Apr 25
Since President Biden took office in 2021 there have been repeated comments and speeches about his plans to change the tax landscape for families in America. I have written prior Blogs about tax legislation introduced in 2021 that was eventually dropped at the end of that year when the Build Back Better Bill was passed and enacted into law.
The proposed legislation would have eliminated a number of estate tax planning strategies, including but not limited to:
the use of irrevocable life insurance trusts;
valuation discounts for family businesses;
stepped-up basis for transfers of assets from one generation to another; and
a reduction of the Federal gift and Estate Tax Exemption from approximately $12.5 million per individual to $3.5 million
With the resumption of the budget/“Debt Ceiling” negotiations this Spring, the Biden Administration is proposing many changes in the trusts and estates area that would significantly impact estate planning, including brand new proposals that were not included in the Build Back Better Bill. Even though there is now a House of Representatives controlled by Republicans, many Estate Plan professionals and persons who are engaged in the legislative process in Congress believe that Republicans may consent to some of the proposed changes in the law to achieve their budget/debt ceiling goals.
The message is that if planning is in the works to adopt strategies to reduce estate tax liability, then you should act now, because the changes (if made) will go into effect when President Biden signs them into law. There will be no time to make changes after the proposed legislation is enacted into law.
While most of the strategies to be eliminated will not affect a large segment of our population initially, it is a harbinger of things to come as our federal government hungers for more and more tax dollars.
There is a laundry list of proposals – too many to list here, however our office will keep you posted as these legislative discussions continue.
If you have had a discussion with us about possible estate tax liability in 2026, it is important to contact us now so we can set a plan in place, to react quickly on legislative changes that may affect your estate plan.