May 27, 2021
BIDEN-SANDERS Estate Tax Proposal | Estate and Gift Tax Bill Impact On You
To understand where taxes are going we need to understand where we are coming from.
Right now we are operating under the Trump Tax Cuts and Jobs Act.
What the Tax Cuts and Jobs Act do is,
1. Lower the marginal tax rates across the board by about 3-4%
2. Doubles the Estate Tax exemption.
If the Biden-Sanders tax proposal does go through, what would that mean in terms of Estate Tax?
Currently, the Estate Tax Exemption is at $11 million, thanks to the Tax Cuts and Jobs Act.
When the Tax Cuts and Jobs Act expires either in 2025 or when Biden repeals it, then that $11 million exemption will drop to $5 million.
Sanders just introduced an Estate and Gift Tax Bill that will further reduce the Estate Tax exemption down to $3.5 million.
One of the things you can do is be proactive now and take advantage of this window of opportunity before those changes happen.
Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.
Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.
Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.
With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.
For more info visit:
https://castlewealthlegal.com/home
https://michiganestateplanning.com/
Episode Transcript
Tax Cuts and Jobs Act
Hey, this is Chris Berry with Castle Wealth Group. Today, we’re going to talk about the Biden-Sanders tax proposal and what it means for you. If you like this information, please make sure to subscribe to our YouTube.
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 as author of the Amazon bestselling book, The Caregiver’s Legal Guide.
To understand where taxes are going, you need to understand, where are we coming from? Understand right now, we’re operating under the Trump Tax Cuts and Jobs Act. The Tax Cuts and Jobs Act, which runs from 2018 to 2025, unless Biden and Sanders get their way and repeal the Tax Cuts and Jobs Act.
Now the Tax Cuts and Jobs Act is important for two main reasons. One is it lowers marginal tax rates across the board about three to 4% during the Tax Cuts and Jobs Act, and then the second reason is it doubles the estate tax exemption. That’s really what I’m going to focus on today is if that Biden and Bernie Sanders tax proposal does go through, what will that mean in terms of estate taxes?
Estate Tax And Gift Bill
The estate tax, inheritance tax, or death tax, it’s a tax that the government levies when you pass away, but the government’s been nice enough to give you an exemption or coupon, meaning as long as you die with less than whatever the exemption is, you owe zero in estate taxes. Currently, the estate tax exemption is at $11 million thanks to the Tax Cuts and Jobs Act. Now, when the Tax Cuts and Jobs Act expires, either in 2025 or when Biden repeals it, then that $11 million state tax exemption is dropping down to $5 million.
Now, Biden and Sanders proposed an estate and gift tax bill that would reduce the exemption, not just from the $11 million to the $5 million, but now it would reduce that exemption down to $3.5 million. It hasn’t been that low since the early 2000s. We’ve been at $5 million, if not higher, since then. The Biden and Bernie Sanders proposal would lower that estate tax exemption down to $3.5 million, meaning if you pass away with more than $3.5 million worth of assets, whether it’s Roth money, whether it’s life insurance, whether it’s pre-tax dollars, whether it’s real estate, whether it’s a business, whether it’s farm land, if you have more than $3.5 million, the government’s going to take another swipe of your assets, maybe taking up to 45%.
There’s different strategies that we can utilize to try to protect those assets if you are over that estate tax exemption amount, one of the things is we need to be proactive now and take advantage of this space we have in the Tax Cuts and Jobs Act, where maybe we can remove money from your estate now so that if the state tax exemption does drop, we’ve already removed it from the estate. We utilize things like family inheritance trusts or irrevocable life insurance trusts, or if you have charitable inclinations, there’s certain things we can do from a charitable standpoint as well.
But understand that we have this window of opportunity where currently we’re at this $11 million exemption, but we know that Biden wants to repeal that to lower it to $5 million, and then Bernie Sanders just had this bill that was introduced to lower it even further to $3.5 million. There’s certain actions that maybe you want to explore, maybe removing a chunk of that money from your state now, that you have to take advantage now before those changes happen.
If you liked this information, please make sure to subscribe to our YouTube channel. This has been Chris Berry with Castle Wealth Group. Thank you.
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.