Estate Planning After the Election: What to Expect Under President-Elect Trump

On January 20, 2017, Donald Trump will become the 45th President of the United States. Earlier in January, the Senate and House will convene with Republican majorities. How you update and manage your estate plan and financial plan under the Republican controlled Congress and Presidency can make a significant difference in your tax burdens and the way your wealth continues to accumulate.

We are monitoring the situation vigilantly, and we are already strategizing for a wide range of potential tax and regulatory changes in order to provide you with the best possible advice about any changes to your estate plan.

Let’s look briefly at how some of the preliminary details of President-elect Trump’s proposals could affect your estate.

Donald Trump’s Proposals –

Donald Trump has proposed across-the-board reforms in the tax codes, and while he promises to close up some loopholes, the general trajectory of his proposals is toward lowering taxes overall.

You can find the details of his tax plan on his website, but the most pertinent points are as follows:

• Lowering income tax rates across the board, including significant raises to the standard deductions
• Reducing the number of individual income tax brackets from 7 to 3, with a maximum tax rate of 33 percent (down from 39.6% today)
• Reducing the business tax rate from 35 percent to 15 percent
• Eliminating the federal estate tax

Remember that any change to the tax laws requires Congressional approval, which will not happen automatically. Although the Republicans will be in control of the Presidency and Congress, there will still be negotiations and compromises reflected in the “final” tax law that comes out of Washington. And remember, the rules are only “final” until the government decides to change them again.

Our Recommendations, assuming President-elect Trump’s agenda is put into law:

• Be Cautiously Optimistic. Potential elimination of the federal estate tax is likely to be welcome news if you have higher net worth (or even if you are on your way there), but this proposal may be subject to opposition or compromise in Congress. This compromise could range from a “sunset” provision to gradual phase-in or something else entirely. We’ll have to wait and see. Do not assume the federal estate tax will automatically be eliminated on Day 1 of the Trump Presidency.
• It’s More than Just Taxes. Although taxes have long had top billing in many conversations about estate planning, the real reasons for estate planning are present, no matter who is in the White House and Congress. This includes planning for the distribution of assets in an manner which is designed to preserve and protect inherited property for the next generation, medical and financial decision making during incapacity to avoid a guardianship proceeding, deciding how your financial legacy will be distributed to your intended beneficiaries, asset protection planning, and more. No matter how hard Congress may try, they cannot legislate away dissolution of marriages, lawsuits, wasteful spending by young beneficiaries, and other issues that can be properly addressed through well accepted trust and estate planning strategies.
• Stay Tuned for Updates. As tax and regulatory reform starts being fleshed out in Washington and ultimately enacted into law, we will provide you with further recommendations on how to best proceed.

Preparing your Estate Plan for the Next Administration –

With all the volatility surrounding this now-concluded election cycle, the only thing of which we can be certain is change. Remember, political winds often blow in many directions. Therefore, regardless of who you supported in the Presidential election, prudent action will be required to protect yourself in order to ensure that your property distributes in a manner which protects and preserves your assets for your family. Planning is the best way to protect your wealth against any future changes.

If you would like to learn more about effective wealth transfer planning strategies, in light of anticipated changes on the political front, please contact The Levin Law Firm to arrange a Complimentary Consultation with estate planning attorney, Philip Levin, Esq. at 610-977-2443.