October 5, 2020 Connor Steens



Act now and act fast, Joe Biden’s tax propositions highlight a critical point in time to plan for higher tax rates and altered policies that would significantly affect your wealth.

Without delving into the increased individual income taxes noted in ‘Strategize for the Democrats’ Tax Plan’. An important element of Biden’s tax proposals is the removal of the favorable tax exemptions in the Tax Cuts and Jobs Act of 2017 that was introduced by President Donald Trump. Under Biden, high-income taxpayers will see both an increase in individual taxes and the current gifts and estate tax exemptions lowered to approximately $3.5m ($10m per couple) as opposed to the current $11.58m ($23.16m per couple). With the current exemption being as generous as it is and the proposed exemption being so low, if you are planning on administering your assets to a trust, it is time to act now, gifting must be in place before January 1st, 2021.

How will the gifts and estate taxes change?

  • As previously mentioned the exemption could be as low as $3.5m ($10m per couple)
      • Under the current regulations, a couple may gift their assets of $15m and pay no federal estate and gift tax.
      • Under Biden’s proposal, the same couple will pay estate tax on $5m out of the $15m that is gifted.
  • Estate tax rates could increase to 60% from its current 40%
  • Elimination of the current step-up in basis at death.
      •  Currently, an asset held at death is “stepped up” to fair market value at the taxpayer’s date of death. An heir is therefore able to minimize their tax liability when they sell these assets
      • Biden has proposed taxing the unrealized appreciation of the assets, at death. The heir would be subject to taxes at the transfer.

The current Tax Cuts and Jobs Act is an opportunity not to be missed, transferring assets to a trust presents a chance to secure your assets safely and efficiently. Minimizing losses is a critical detail to act on with the upcoming election.

Southpac has nearly 40 years of experience administering foreign asset protection structures, contact us today for an obligation-free conversation about your wealth planning options.

If you would prefer to call please call us toll-free on 1-800-361-5120.

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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