J. Kelly Kennedy, Attorney/CPA, PLLC

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President-elect recommends change in administering estate tax

They way estate planning is handled from top-to-bottom is in response to how legislation can affect the estate. Laws can determine how much and why certain people are taxed on their assets. Estate tax responsibilities have not changes much in recent years. However, the current president-elect has outlined an overhaul of the system in which estates, wills and trusts are taxed.

The changes recommended by the Trump administration call for a change in the way estate administration would operate. Currently, there is a focus on taxing the estate by means of taxing the estate when it transfers to a new beneficiary. In comparison, the changes in estate tax would instead tax the capital gain the estate made after the estate totals more than five million. Essentially, large estates would see the greatest change in the way the assets are taxed. Those with estates less than five million may favor the new plan due to the proposed elimination of transfer tax as the 40% tax would affect assets after five million.

It is unclear if these changes will go through during the president-elect's term in office. However, it is good to be on the look-out for these type of legislative changes as they could have major affects on how an estate is transferred to a beneficiary. Depending on the value and nature of the estate, new laws as to how estate should be taxed could be favorable or unfavorable. If the estate does not adjust for changes in legislation, it could result in an unfavorable outcome for the costs incurred to the estate.

With the new president about to take office, changes may begin to unfold. Staying abreast of these issues can be crucial to ensuring the estate is managed correctly. Any changes made to an estate much be done in writing and must be completed before the decedent passes away. Time may be of the essence for the estate and the people involved.

Source: dailybusinessreview.com, "Trump plan for elimination of estate tax changes focus of estate planning," December 22, 2016

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