2020 is an election year, which means there could be major changes in tax laws. At Ged Lawyers, LLP., our Boca Raton estate planning attorneys can help protect you and your assets.
The 2020 elections may seem like a long way off, but election day will be here before you know it. Depending on who wins, there could be major changes ahead. If the Democrats take control, decreases in the current estate and gift tax exemptions are likely to be one of their first undertakings. Regardless of which side of the aisle you are on, addressing this possibility now in your estate planning is vitally important to protect yourself and your assets.
Potential Changes in 2020 Could Impact Your Current Estate Plan
The current administration passed a law that made sweeping changes to the tax code in December of 2017. Among these was a significant increase in the estate and gift tax exemption. Under the Tax Cuts and Job Acts, it was increased to $11.4 million per individual, up to $22,8 million per couple, which was more than double the $5.5 million taxpayers could claim the year the new law was passed. This meant an individual could now shield more of their assets and leave greater amounts to their beneficiaries, without having to pay federal estate or gift taxes.
The tax changes prompted many people to revise their estate planning documents, which may eventually create problems after the elections in 2020. The Democrats have already introduced Senate Bill S.309 in Congress. Referred to as the ‘99.8 Percent Act,’ it proposes reducing the estate and gift tax exemption for its current level to a basic exclusion amount of $3.5 million. If a Democratic candidate wins the Presidential election, this bill is likely to be one of the first passed.
The Problem with Waiting to Make Changes in Your Estate Plan
While potential changes to the current estate tax rate may be close to a year off, it is important to take action now to protect yourself. There are several problems that could result from taking a ‘wait and see’ attitude:
- Effective dates: The date chosen for any new legislation may not allow your current trust or other estate plans to be ‘grandfathered’ in. Better to make these changes now, before the new year begins.
- Increased scrutiny: Sudden, dramatic changes in your estate plan in response to decreases exemptions are likely to result in increased scrutiny from tax officials. Taking action now allows you to implement changes over a longer period.
- The risk of fraudulent conveyance: A large single transfer into a trust to avoid estate taxes could raise suspicions of fraudulent conveyance. This is when assets are transferred with the intent to defraud creditors and involves heavy penalties.
Contact Our Boca Raton Estate Planning Lawyers Today
At Ged Lawyers, LLP., we can help you make changes now to your existing estate plans, ensuring you are protected regardless of what the new year holds. Contact our Boca Raton estate planning attorneys and request a consultation today.