Estate Planning 2021

{4 minutes to read}

As the Biden administration ramps up, it’s inevitable that there are going to be some tax law changes. The extent of those changes obviously can’t be predicted, but I think it’s a good topic for people to consider.

Donald Trump put in a very large increase to the amount of wealth that can be transferred either by gift or at death, from one generation to another. People made decisions in 2016 and ’17 regarding their estate plans, based upon the changes that were made under the Trump administration. They wanted to take advantage of the opportunities that the new laws allowed. Those changes, however, have a double-edged sword.

At the time, a lot of people felt that they didn’t need to do any estate tax planning because they could pass just over $22 million tax-free on a federal level. However, many people who follow the changes in estate tax rules realize that those rules were temporary since they would automatically sunset (revert back to the law prior to the changes made under the Trump administration) at the end of 2025. With Trump no longer the president, and a new administration in place, we can pretty much count on changes being made prior to 2025. One of the pending changes, endorsed by Bernie Sanders, would lower the lifetime exemption down to $3.5 million, which is a big, big, big reduction.

The thing that I want people to understand is that it is not wise to make long-term decisions based on short-term tax law.

Unfortunately, the government keeps on changing the rules. Every time a new administration comes in, it seems like the tax laws are changed. People think: “Okay, now the rules are this, and they’ll stay that way.” But the reality is, the rules will keep on changing.

People will say, “Oh, I don’t need to keep this life insurance because I don’t have an estate tax liability.” And then, four years later, the rules change and those same people, who have now dropped those coverages or didn’t do the planning needed, are then thrust into a position where they need to do proper, smart estate planning that makes sense regardless of the changes in the tax law.

My message is that when you’re doing estate planning, you want to do it with the type of forethought that understands — if you’re 50 years old, you’re a couple, and you have a joint life expectancy of some 35 or 40 years — the estate tax rules may change five, seven, ten times between now and when your family will be dealing with the estate tax. So, you really want to make long-term decisions, in spite of short-term changes.

Our team of experts, my colleagues, and the attorneys we work with help people set up smart estate plans that not only work based upon the current situation and rules, but allow people to have a plan that will work when the rules change. And that’s the type of good estate planning that people need and that we provide.

So, if there’s a need, or if you’d like to have a discussion regarding your estate planning, give us a call. We’d be happy to build a plan that works for you, not only for the short-term but for the long-term, as well.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS.  Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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