Wealthy people in New York State need to be aware of the ways that tax laws can impact their assets. In 2016, the Tax Cuts and Jobs Act made it possible for high net worth people leave up to $10 million to people other than their spouses with no tax impacts. This doubles the previous amount allowed. However, this measure wasn’t written to be permanent.
It’s important to act now
Unless they are renewed, these estate tax provisions will expire in 2026. In 2020, government bodies have needed to spend a lot of money on disaster aid and stimulus packages. That makes renewal seem uncertain. Politicians will want to replenish their funds somehow, and taxing high net worth individuals is one way to do that.
The other issue is the elections in late 2020. The TCJA was a cornerstone of a Republican president’s platform. If Democrats come to have a majority in the Senate, it’s likely that they will try to repeal this legislation. Their platform is more about increasing taxes, not about enabling people to retain the estates they’ve worked to build.
Estate planning experts are recommending that people make transfers now, rather than waiting. For example, this is a good time to give large amounts of money to grandchildren. If you wait to make a large gift, even for just a year, they may lose a sizable portion of it to taxation.
An experienced attorney will have the most up-to-date information about tax law and how it affects gifts and inheritances. They know a lot about what deductions can be used to reduce tax burdens. Lawyers with estate planning experience will also be able to provide advice about tools like trusts and the benefits they can provide.