A Look at the Presidential Election From a Tax Perspective : Ramifications From Tax Perspective

Ramifications from Tax Perspective
Atty. Chris Berry talks about what the Presidential Election means to the future from a tax perspective.



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Episode Transcript


Saving for Retirement

Hello, this is Chris Berry with Castle Wealth Group. Today what we’re going to talk about is what the presidential election and the Senate flipping means for the future. If you like this information, please subscribe to our channel.

Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications such as Forbes, Kiplinger’s, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning and has authored the Amazon best-selling book, The Caregiver’s Legal Guide.

The news is, of course, that Georgia has went to the Democrats. We thought it was going to be Republican-held, which means that now the Senate also goes to the Democrats along with the House, and obviously the presidency. This isn’t a political-educational video. We’re just going to talk about the ramifications of it. The big thing is is that a lot of the Biden proposals, now, are going to be able to be pushed through a lot easier, whether you agree or disagree with them. One of the big things that means is, from a tax perspective, we have to look at the Tax Cuts and Jobs Act, which was passed under the Trump administration. Biden has talked about repealing that, which means taxes will go up across the board. Marginal tax rates will increase, revert back to what they were prior to the Tax Cuts and Jobs Act.


Estate Taxes

Then, two other big things that I think any retiree, or pre-retiree, or anyone saving for retirement, or thinking about their legacy needs to think about: the first one is that he’s talked about repealing the step-up in basis. Step-up in basis, it’s confusing, but understand that when you purchase something, say, $100,000, and it grows to $200,000, and then you pass away and you leave it to the kids, they get a step-up in basis. They don’t owe any tax. They don’t have to pay the tax on the gains versus =repealing that step-up in basis. Now, the kids would have $100,000 worth of gains that they have to account for. That’s a stealth tax. That’s pretty sneaky, and that’s part of Biden’s tax proposal.

The second thing is estate taxes. Right now, estate taxes, with the Tax Cuts and Jobs Act in place, is that $11 million. Meaning, as long as you pass away with less than $11 million, you owe zero in estate taxes. When the Tax Cuts and Jobs Act gets repealed, that’s dropping down to 5 million, and then Biden has ran on the proposal of lowering that estate tax exemption to three and a half million. So if you have more than that, there are certain strategies that maybe we should employ right now, actually, to take advantage of the higher estate tax exemption right now. I’m not talking about passing away to die. But one of the things, and I’ve talked to clients about this, is if the estate tax exemption is 11 million right now, and it’s dropping down to maybe three and a half million, well, understand it’s a unified credit with a gift tax. Most people don’t realize they have a lifetime gift tax exclusion amount that’s tied to the estate tax.


Window of Opportunity

Right now, over your lifetime, you could gift away $11 million. Well, what the IRS said is that if you gift that now, it doesn’t effect that lower estate tax in the future. If we have $11 million now, and you gifted five million right now… I’m not saying it has to be gifted to a child. It could be gifted to a trust. You would still have your $5 million estate tax exemption when the exemption drops back down. It’s an interesting little planning idea, and that’s just one of the ideas that can be taken advantage of. But the window of opportunity on that… Just like some of these Roth conversion ideas, the window of opportunity is closing. It’s closing sooner rather than later, now that we know that Georgia has flipped and the Democrats have the presidency, the House and Senate. Just something to keep in mind.

Again, I’m not trying to get political. I’m just trying to talk about the ramifications, what it means looking forward. The big thing, the big risk, and the bigger opportunity right now is again taxes. So if you liked this information, make sure to subscribe. Thank you so much. This has been Chris Berry from Castle Wealth Group.

Castle Wealth Group has clients across the nation and helps families plan, protect, and preserve what is important by creating a retirement and legacy blueprint.



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