September 29, 2021 Connor Steens

ESTATE TAX CHANGES UNDER REVIEW: SECURE THE CURRENT BENEFITS NOW

BY CONNOR STEENS

A new tax Bill making its way through the US Congress looks to terminate the benefits of tax-free gifting out of a taxable estate. Summarised, if you are considering establishing a grantor trust in order to reduce your taxable estate the trust must be established before the law is enacted. A grantor trust formed after enactment will be considered a part of your taxable estate.

If  you already have an established grantor trust, additional assets placed in the trust will also be affected by the new Bill and subject to the purported increased tax rate. It is therefore crucial that a trust is established and assets are placed in the trust before the new Bill is enacted, a date that could be as soon as October 2021.

If estate planning is within your considerations, now is the time to act in order to protect your assets from increased tax rates and in turn increase savings on your taxable estate.

Currently, it is possible to have an estate of up to $11,700,000 without incurring any gift or estate tax. Under the new Bill it is likely that this limit will be halved to around $6,000,000. Meaning that any funds over $6,000,000, placed into a trust after the Bill is enacted, will be subject to the increased gift and estate tax rates mentioned further on.

As of today, the current gift and estate tax rate is 40% of the taxable estate’s value. While discussions are still ongoing, suggested rates have been as high as 65%, posing a significant threat to the value of your estate.

With such significant alteration to both the tax rate and the threshold to which such taxes are applicable, substantial financial losses are possible and acting now is the best way to safeguard your assets.

Contact us here to get started on establishing a trust or settling further assets on an existing trust.

Connor Steens

Connor Steens works as an Analyst at Southpac Group. Connor has worked closely with Guy on investment an banking relationships. Connor currently oversees and monitors current marketing analytics, exposure and direction, content creation and market presence.
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