Confused About the Biden Plan on Estate Taxes? Get Help
While President Biden’s latest tax plan noted at the end of April 2021 dropped the estate tax expansion, which is a good thing for property owners, it did not alleviate overall tax exposures for upper brackets as well as capital gains tax levels. Both of these come into play for anyone incurring a sizable income in a given year or realizing large capital gains, usually from a real estate sale.
The general hit is buried in the income tax brackets that affect most people. The current upper margin if 37 percent would rise 2.6 percent under the Biden Plan, and on the capital gains tax side of things it would increase a whopping 15.8 percent from its current 23.8 percent. In short, regardless of how one earns income, he or she will be charged the same across the board in high income tax brackets. That might seem applicable to company executives making seven figures, but it also captures folks simply selling property or investments. The Biden Plan would also close off an inheritance protection that normally would allow one to avoid a capital gains tax hit when inheriting property, known as the stepped up in basis. The property gain taxed right now works off of the value at inheritance, not when it was first bought. All of these changes would have a dramatic negative impact on real estate transactions, and attorneys in Seattle Washington and elsewhere have been busy answering related questions.
The Possibility Factor of Tax Changes
Not everything proposed in Congress will go through, but there’s always the chance some part of the Biden Plan will see the light of day by being enacted into law. Keep in mind, the government spent an amazing amount of money over the last year and half dealing with the ramifications of the COVID pandemic, both in upfront medical expenses and response, as well as the economic impacts and providing benefits to individuals and companies. There is a corresponding need for the government to now start recovering its tax revenue reserves. Estate planning and real estate moves need to take the Biden plan into account as a near-term risk.
Don’t bet on seats in Congress to hold things off. The last election transferred the general control of power from the Republicans to a Democrat majority in both houses, even if slim by count. As a result, the opportunity exists for tax increase proposals to make it through Congress, as well as reverse a number of the tax protections enacted in 2017. Granted, a filibuster could tie things up for a while, but that procedural move takes a lot of work and has mixed results. Alternatively, Democrats could use a budget reconciliation maneuver which only takes a majority vote to move through, and it would cause an alignment of past tax laws with current ones, removing old protections.
Estate Planning Attorney Seattle Help is Available
While there are lots of attorneys in Seattle Washington in general, it takes specific expertise to anticipate current as well as potential new legal risks that may be coming over the next few years. Wills and trusts can be written but most attorneys using technical templates, but effective estate planning attorney Seattle help takes experience. Frey Buck P.S. has spent the last few years navigating the massive changes that have already occurred since the Tax Act changes from the Trump Administration, and what the new Biden Plan means in terms of paradigm shifts going forward. As a Seattle estate planning attorney, Frey Buck P.S. can provide both the peace of mind that assets will distribute the best way possible for beneficiaries as well as help movements of real estate and capital gains for current changes now. Work with a Seattle estate planning attorney today.