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Estate Planning and Charitable Giving Likely to Change


Estate Planning and Charitable Giving Likely to Change

Broad stroke promises of cutting taxes and eliminating estate taxes are easily made, but we’ll only know what will take place after president-elect Trump puts his agenda into action. Things may not change as swiftly as some may wish, but there are certain steps that some estate planning attorneys are recommending for their clients in advance.

The Wall Street Journal’s article, “How the Wealthy Should Plan for Taxes Under Trump,” talks about some of the steps to consider taking before the end of the year.

Charitable Considerations. If you donate cash as the law now stands, you can deduct up to 50% of your adjusted gross income (AGI) for the tax year that you gave the donation. If you give more than 50%, the excess can be carried forward up to five years. Trump wants to restrict deductions for donations with a provision that limits individuals’ itemized deductions to $100,000 a year or $200,000 for joint returns—a proposed limit that would apply to all itemized deductions, including charitable deductions. These limits would significantly hamper wealthy individuals’ use of the charitable deduction. To get out in front of Trump’s possible change, if you are planning to make large charitable donations over the next several years, think about making those gifts in 2016 to lock in several years of deductions.

Business Considerations. You should think hard before selling your business or certain appreciated assets during this year, with the current investment and business income of individuals subject to a tax rate up to 43.4%, including the 3.8% tax on net investment income. Trump’s plan would decrease that top tax rate to 33%. Therefore, if you’re considering a transaction that would mean the recognition of substantial income—like the sale of appreciated assets—you might think about deferring the transaction until 2017.

Earlier in the year, there was a lot of concern about changes to valuation discount planning and how it would impact family owned businesses. This refers to a technique used to transfer interests in family businesses at a discount that resulted in generous tax savings. The IRS had proposed regulations that would have made it difficult to use this method, but the new administration may not support these changes. If there is no estate tax, this and other methods may not need to be used to reduce the size of estates. However, Trump’s plan would impose income taxes on the capital gains of assets held at death, beyond an exemption of roughly $5 million per person or $10 million per couple.

Speak with an experienced estate planning attorney like Daniel T. Fleischer to discuss all of your options. There may be steps that can be taken before the end of 2016 that will reduce your tax liability, regardless of what changes may occur in the coming year.

Do you live in Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: Wall Street Journal (November 24, 2016) “How the Wealthy Should Plan for Taxes Under Trump”

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