Southwest Florida

New Confiscatory Tax Laws in Congress May Affect You

There’s a bill coming before the House that, if passed as written, will reduce the current estate tax exemption amount from $11,700,000 per person to $5,000,000 per person (adjusted for inflation). If the fair market value of your assets is in the $5 million ballpark (per person), or higher, it may be time to look at ways to reduce your taxable estate.

Tax laws changing
Tax laws are changing. Pay attention.

At your death, your “estate” for IRS purposes is different than your “estate” for probate or trust purposes – the IRS counts EVERYTHING in which you have ANY ownership interest – IRAs, 401(k)s, real estate, bank and investment accounts, life insurance, artwork, machine guns, etc., no matter whether you own the assets individually, jointly, or in a revocable living trust. Sometimes, even assets you put into an irrevocable trust will be counted if transferred too close to your death.

But even if your assets are far more modest, some of these proposed changes could affect you. There are sneaky increases in income tax rates, and many common financial and estate planning techniques could be reduced or disappear.

The bill is not law at this time – it may never become law, or it may be changed somewhat before becoming law. But pay attention to all the bills floating around Congress that could affect your taxes. If this bill passes as written, the intent is to not allow anyone to do advance planning – much of it would go into effect on January 1, 2022.

In typical political weasel manner, these bills will likely fly through Congress and onto the President’s desk right before the holidays – when you, your financial advisors, and your estate planning attorney are busy with other things or spending time with family. There won’t be time to create and fund trusts or do take advantage of other planning strategies. And then, after the bill is passed, it’ll take months for the IRS, tax professionals, and estate planners to figure out what’s changed and what the new rules are. 2022 will be ugly for many taxpayers.

Here are a couple of Forbes articles describing what’s in the bill that will soon be on the House floor:

Be vigilant.

Other articles you may find interesting:

Don’t Wait Until it’s Too Late

Preparing to Meet with an Estate Planning Attorney

Ready to make sure everything’s in order for your loved ones in the event you become incapacitated or die? Give Manasota Elder Law a call at 941-444-5958. We’ll help you determine whether you’re all set, or whether there are still some things that need to be done to protect what’s most important to you … your family.

You wonder whether your granddaughter will think of you fondly when you’re not around anymore.

You want to make sure someone will love and care for your dog, horse, or parrot when you can’t.

Your spouse doesn’t share your love for guns, and you fear your collection could be sold for almost nothing – or even destroyed – instead of being passed on to your children or others who share your passion.

Contact us today. We can help.