Probate law will likely change under the new presidential administration. Trump calls for a repeal of the estate tax. He also proposes a capital gains tax on assets left behind over $10 million. The details are still unclear, but an experienced probate lawyer can answer questions about estate planning.
What Is an Estate Tax?
There are two taxes on estate assets. Federal Estate Tax and State Estate Tax, which applies in Illinois. The estate tax for Illinois only applies when the value is over $4 million. The rate is varied, but the effective rate is around 30%.
As of January 2017, individual estates of $5.49 million or more are subject to Federal estate taxes of 40%, up from the minimum of $5.45 million last year. While most Americans are not affected, those that are may owe a significant amount of money in taxes after a loved one dies. Some families may be affected by only the state tax, and others may be affected by both state and federal.
How is a Gross Estate Determined?
All assets are totaled, including:
- Bank accounts
- Certificates of deposit
- Investment accounts
- Personal property
- Real estate
- Life insurance proceeds
An online calculator is provided by the Illinois Attorney General to help calculate assets and tax due. Estate planning can be difficult and emotionally challenging. A probate lawyer can provide guidance during the process.
What Could Changes to Estate Law Mean?
The death tax is thought only to affect the very wealthy, which is untrue. Middle- and upper middle-class families that lived frugally often bear the brunt of the tax. The wealthiest Americans protect their inheritances from state and federal estate tax using teams of lawyers and accountants.
When all assets are included, families may suddenly find themselves at the threshold of a huge tax bill. Trump plans to repeal the so-called death tax. Capital gains valued over $10 million will be taxed, with exemptions for small businesses and family farms. Contributions to private charities to mask assets will not be allowed.
Families Can Plan Ahead
Planning ahead is important for everyone, from those with modest means to the ultra-rich. When potentially large sums of money are at stake, it’s important to protect businesses, homes, and loved ones after someone dies by seeking a qualified attorney. It is also impossible to know when an estate tax repeal may occur.