Am I the only one who feels like this year has both dragged on and sped by, all at the same time? Last week I had the quietest Thanksgiving I can remember, just me and Brian and a meal we cooked a few nights earlier during a virtual cooking class. While that’s not the way I want it to be next year, we truly enjoyed it and made the most of a relaxing day together.
There are a couple of potential tax changes on the horizon that we want to make sure you’re aware of:
In this video, Catherine introduces two potential tax changes that may arrive next year that could affect your estate plan.
Step up in basis
First, under President-elect Biden’s proposed tax plan there are no income tax changes for those who make less than $400,000 a year, there is a proposed change that would impact the choices you make regarding your estate plan. The proposal is that inherited assets would no longer receive a stepped up basis, but at death they would be subject to capital gains tax based on the original basis you had in the property or asset. This change would have to pass Congress in order to become law, but it’s a big enough change that we want you to be aware of the possibility. If this comes to fruition, we will provide guidance on how to minimize taxes in various situations.
Estate tax exemption
Also, there is a strong likelihood that the estate tax exemption could be reduced from its current $11.58 million per person to a much smaller amount. That exemption amount is currently scheduled to sunset (and therefore be reconsidered) in 2025, but because of the pandemic and the money the government has spent helping individuals and businesses there is a fair amount of speculation that the exemption could be substantially reduced as early as next year. If that happens, any amount over the new exemption would be subject to tax at a rate likely to be at least 35-45% when you die.
There is a way to ensure this change doesn’t mean an increased tax bill for your family, and that may include making gifts before a new law goes into effect. Again, we will keep you posted on any changes as they come. If you’re interested in making lifetime gifts now to make sure you get the benefit of today’s exemption amount, just call our office and schedule a call with Jessica or Chad to review your situation specifically.
Hammond Law Group changes
Some of you know that we’ve been members of the American Academy of Estate Planning Attorneys for the last 15 years. In fact, I served on their Board of Governors for the last two years. We have determined that in order to best serve our clients we will be departing the Academy effective January 1, 2021.
We are excited about this change, which coincides with a branding transition and new logo you may have noticed recently. We are committed to constantly learning and evolving in order to serve you. You may notice tiny changes related to our move away from the Academy, including some differences in any documents drafted in the future. Rest assured your documents and our ongoing education will continue to be world class, and we believe will even better meet your needs. If you have any questions please don’t hesitate to call our office or drop us an email.
As we enter this holiday season please know that we are thinking of each of you and your loved ones. It will be a year to remember, for sure. Maybe not for the reasons we had originally hoped, but it’s not too late to make it memorable in how it transforms you and your relationships for the better. If I can support you with coaching to move through this season in a way that empowers you to thrive on the other side, let’s schedule a call.
Whatever holiday you celebrate this time of the year, we are sending you wishes for a season full of health, joy, and peace.
From my heart to yours,