THE NEW BIDEN TAX INITIATIVE
By Richard K. Citron and David Deutsch
LOS ANGELES, CA, UNITED STATES, April 6, 2021 /EINPresswire.com/ – As you know, new legislation will be presented to Congress that will raise taxes in all areas for the richest people. While we don’t know what will result in the new law, we do know what the president has put forward in his platform.
Inheritance tax is not paid today for estates of US citizens up to $ 23.4 million (married couple). President Biden wants to reduce that number to $ 7.0 million. Word around town is that that number ($ 23.4 million) will likely be cut to about half, the level it is expected to return to in January 2026. Also, we don’t know when the law will go into effect. This could be January 1, 2021 or January 1, 2022, or it could be the date the bill is presented to Congress or the date the bill is passed and enacted.
Biden is also proposing a gradual increase in the estate tax rate, starting at the current 40% and increasing with the size of the estate.
There are legitimate methods of mitigating these tax increases, most of which involve giving gifts to your children as soon as you are comfortable giving gifts. You can retain direct or indirect control of these gifts depending on the type of asset. For real estate, you can use a Family LLC of which you are the managing partner. For securities and other liquid assets, you can place them in irrevocable trusts with a friendly trustee and thoughtful language about distributions. There are also other tools that should be explored based on your personal wishes.
In order to properly assess your gift options, you need to review your entire estate plan and your asset mix. The decision is very thoughtful and includes consideration of:
Type of asset and where it is located
How the title is held today
Your estimated value today
Loans against the asset
Base on ownership for tax purposes
Current annual property taxes
Property cash flow
Do you expect a low, medium or high appreciation
And other things.
If you are concerned about property taxes, you should review them as soon as possible.
Please do not hesitate to contact Citron & Deutsch at the contact details below if you wish to discuss any of the items contained in this newsletter.
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