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Estate Tax and Biden Presidency

10,284 Views | 162 Replies | Last: 3 yr ago by I bleed maroon
Gap
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Is there any sane reason for me to wait until a future year to do some gifting to utilize the current $11.5M estate and gift tax exemption? It seems to all hinge on whether the democrats can win the Senate seats in Georgia, but those runoffs occur after it may be too late in January 2021. The democrats two plans seen to be significant reductions of the exemption to $3.5M or $5.6M.

Any communication that the democrats would put off changes to that law to a future year and leave the current $11.5M for 2021 if they win so that people have a year to prepare for any changes?
YouBet
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AG
It's still a guessing game on whether or not this change happens. We are watching the senate closely though because of the massive tax implications. Everyone on standby ready to make changes if R's lose.
YouBet
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AG
The articles I've read on Biden tax policy are actually aggregates of campaign statements and policy positions none of which have much of a concrete timeline tied to them.

I can't imagine you aren't looking at a first 100 days push though based on what Schumer is saying.
jagged
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AG
Dunno about timing or scope of legislation but gifting is probably a good option if you are positioned to do so.

I would definitely do some scenario planning with a financial advisor or estate attorney. Seems like the way things are headed, there's likely to be more pressure on estates in the short/mid-term.

Keep in mind certain strategies like forming trusts can prove overly engineered and complex for heirs to deal with so make sure the juice is worth the squeeze.
Mostly Foggy Recollection
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YouBet said:

The articles I've read on Biden tax policy are actually aggregates of campaign statements and policy positions none of which have much of a concrete timeline tied to them.

I can't imagine you aren't looking at a first 100 days push though based on what Schumer is saying.


Or first two years for that matter... and I'm pretty convinced Rs will expand their Senate lead in 2022 and retake the House.
YouBet
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AG
Mostly Foggy Recollection said:

YouBet said:

The articles I've read on Biden tax policy are actually aggregates of campaign statements and policy positions none of which have much of a concrete timeline tied to them.

I can't imagine you aren't looking at a first 100 days push though based on what Schumer is saying.


Or first two years for that matter... and I'm pretty convinced Rs will expand their Senate lead in 2022 and retake the House.


My god I hope so.
HalifaxAg
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Mostly Foggy Recollection said:

YouBet said:

The articles I've read on Biden tax policy are actually aggregates of campaign statements and policy positions none of which have much of a concrete timeline tied to them.

I can't imagine you aren't looking at a first 100 days push though based on what Schumer is saying.


Or first two years for that matter... and I'm pretty convinced Rs will expand their Senate lead in 2022 and retake the House.
Only if the fraud issues are addressed, if not, it's 1984 forever
GE
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Gap said:

Is there any sane reason for me to wait until a future year to do some gifting to utilize the current $11.5M estate and gift tax exemption? It seems to all hinge on whether the democrats can win the Senate seats in Georgia, but those runoffs occur after it may be too late in January 2021. The democrats two plans seen to be significant reductions of the exemption to $3.5M or $5.6M.

Any communication that the democrats would put off changes to that law to a future year and leave the current $11.5M for 2021 if they win so that people have a year to prepare for any changes?
How old are you and how big do you expect your estate to get in the future compared to what it is now? We are doing out will and our estate lawyer is having a lot of older clients go ahead and use the exemption now
Ribeye-Rare
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AG
Anyone know whether the Democrat proposals will respect the full amount of the DSUE from prior years?

If 'pa' died recently 'ma' may still have a bunch her estate could use even if hers is reduced.
SPF250
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AG
If I remember correctly, the existing estate tax exemption has an an automatic sunset provision at some point in the foreseeable future. In other words, the exemption amount automatically reverts to a much lower level, without congressional action. Action would be required to maintain the current exemption. Not a tax expert. Maybe there is somebody here who can fill in specifics.
ag94whoop
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I THINK it reverts January 2026 back to $5 million
Casey TableTennis
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It will sunset to $5M per person in 2026. It would take legislative action to even extend current rules into 2026.
mwm
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I've read that Biden/Harris not only want an immediate reduction in the exemption to $3.5M +/- but they also want to eliminate the step-up in basis. If that's what they get, that is going to be a BIG double whammy.
ag94whoop
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AG
Can they really backdate a change to January 1, 2021 like I've heard or would the change have to take place in 2022?
thann07
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AG
mwm said:

I've read that Biden/Harris not only want an immediate reduction in the exemption to $3.5M +/- but they also want to eliminate the step-up in basis. If that's what they get, that is going to be a BIG double whammy.


They will cripple American agriculture.
TriAg2010
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HalifaxAg said:

Mostly Foggy Recollection said:

YouBet said:

The articles I've read on Biden tax policy are actually aggregates of campaign statements and policy positions none of which have much of a concrete timeline tied to them.

I can't imagine you aren't looking at a first 100 days push though based on what Schumer is saying.


Or first two years for that matter... and I'm pretty convinced Rs will expand their Senate lead in 2022 and retake the House.
Only if the fraud issues are addressed, if not, it's 1984 forever


Take your conspiracy theories to Forum 16.
Mostly Foggy Recollection
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thann07 said:

mwm said:

I've read that Biden/Harris not only want an immediate reduction in the exemption to $3.5M +/- but they also want to eliminate the step-up in basis. If that's what they get, that is going to be a BIG double whammy.


They will cripple American agriculture.


They are aware of that. The Democrat party most certainly isn't America first.
Stive
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AG
ag94whoop said:

Can they really backdate a change to January 1, 2021 like I've heard or would the change have to take place in 2022?

I suppose in theory they could vote in a backdate for 2021 but I think that would be unprecedented. Every tax law change they've made (that I've ever heard of or experienced) has always begun at a future date.

And this is all assuming they win the senate. If they don't, there's a 95% chance this isn't an issue for at least 2 more years.
YouBet
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AG
FWIW, our attorney and FA are saying/thinking this would be retroactive.
30wedge
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Stive said:

ag94whoop said:

Can they really backdate a change to January 1, 2021 like I've heard or would the change have to take place in 2022?

I suppose in theory they could vote in a backdate for 2021 but I think that would be unprecedented. Every tax law change they've made (that I've ever heard of or experienced) has always begun at a future date.

And this is all assuming they win the senate. If they don't, there's a 95% chance this isn't an issue for at least 2 more years.
I agree with you about it being possible to backdate but very unlikely. The only time I remember something being done retroactively benefitted the taxpayer. One year, as I recall it was in early January, they made a change in the depreciation rules (either bonus or Sec. 179) that was made retroactive to the prior year. Even then, it likely was an extender that had not been done.
ag94whoop
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YouBet said:

FWIW, our attorney and FA are saying/thinking this would be retroactive.


Meaning what exactly?
Retroactive to how far back?
Stive
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AG
YouBet said:

FWIW, our attorney and FA are saying/thinking this would be retroactive.
With all due respect to both, neither of them know how this would play out since the people that would be writing the law changes aren't even dealing with it yet. Additionally, how would something like this play out "retroactively"? If someone died on January 10th, congress changes the law during the spring/summer and says that the dead person's estate would be taxed even though they're not here to know it? I'm not an absolut-est so I'll give that a .01% chance of happening, followed by a lesser chance of it holding up in court.

To give a semi-appropriate example: in 2010 some estate law changes were applied. Tax payers with situations that were applicable in 2010, were given the option to use the new rules, or the old since the rules weren't in place at the beginning of the year. Obviously it was a relatively small number of people that had to make that choice but the choice was made available to them and they could choose the one that made the most sense for their situation. All of this was under Obama, and huge democratic majorities in both houses of congress, not a senate number like we're looking at now. Additionally, these changes were made in the 2nd year of those super majorities...not the first. If they make tax law changes estate tax laws will be a discussion point but it will be down the list from income tax brackets, capital gains adjustments, and others. It's a political football but in the big scheme of things (with regards to taxes) moving the exemptions down 10-15 million per estate doesn't make a big enough dent in the annual revenue issues to be the big decider at the table.
YouBet
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AG
Stive said:

YouBet said:

FWIW, our attorney and FA are saying/thinking this would be retroactive.
With all due respect to both, neither of them know how this would play out since the people that would be writing the law changes aren't even dealing with it yet. Additionally, how would something like this play out "retroactively"? If someone died on January 10th, congress changes the law during the spring/summer and says that the dead person's estate would be taxed even though they're not here to know it? I'm not an absolut-est so I'll give that a .01% chance of happening, followed by a lesser chance of it holding up in court.

To give a semi-appropriate example: in 2010 some estate law changes were applied. Tax payers with situations that were applicable in 2010, were given the option to use the new rules, or the old since the rules weren't in place at the beginning of the year. Obviously it was a relatively small number of people that had to make that choice but the choice was made available to them and they could choose the one that made the most sense for their situation. All of this was under Obama, and huge democratic majorities in both houses of congress, not a senate number like we're looking at now. Additionally, these changes were made in the 2nd year of those super majorities...not the first. If they make tax law changes estate tax laws will be a discussion point but it will be down the list from income tax brackets, capital gains adjustments, and others. It's a political football but in the big scheme of things (with regards to taxes) moving the exemptions down 10-15 million per estate doesn't make a big enough dent in the annual revenue issues to be the big decider at the table.


Yeah, I agree. I think they are just assuming the most conservative position here since Schumer has said "everything is on the table". When you hear rhetoric like that, it tends to cause people to perk up and take notice and then subsequently start scenario planning worst case.

I do think you have to pay attention to this because the mantra with this admin is going to be we have to soak the rich and this is an "easy" way to do it that the vast majority of people won't care about. It's totally out of sight of most and not relevant. And, yes, I'm aware it's more impactful for some groups (farmers), but most don't care nor do they realize that.
topher06
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I'm good with an estate tax, shouldn't have dynasties in America.
Gap
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If the dems win the Georgia Senate seats, this entire agenda will be passed in the first few weeks. Crazy that we don't know what this will look like just after a presidential election where all of this should have been discussed at length.

I can't imagine this group of democrats making estate tax changes in late January 2021 that don't become effective until January 2022. Punishing the rich doesn't mean giving them 11 months to take advantage of what would then be the previous law.

I just don't feel like this is an area where I want to roll the dice and take my chances if the democrats own the presidency, house, and senate.
birdman
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It only hurts family farmers and ranchers. It allows corporations to gobble them up. ADM and their kind bankroll political campaigns.
30wedge
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topher06 said:

I'm good with an estate tax, shouldn't have dynasties in America.
An estate tax is a feel good tax for those who have not achieved as much in life. They love seeing the government take from those who have achieved. That is why socialist democrats love the estate tax so much.

I have noticed any dynasties and if there are any and nothing illegal was done to become a dynasty, I do not see it is the govenment's business to take from the successful.
SPF250
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AG
That would actually be taking twice. Once when the money was earned and again when you die.
ag94whoop
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topher06 said:

I'm good with an estate tax, shouldn't have dynasties in America.


That's a completely ridiculous take. There are tens of thousands of ranchers and farmers who have sacrificed, lived like paupers and worked their asses off instead of burning through all their earning buying BMWs, traveling the world and buying $15 drinks 5 nights a week. Those people built assets that they worked their entire lives to pass on to their kids and grandkids. It's ridiculous to take that away from them and their families because others choose not to make those sacrifices and make different financial choices.
YouBet
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AG
It also impacts more than just farmers.
TriAg2010
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topher06 said:

I'm good with an estate tax, shouldn't have dynasties in America.


1.) In America, I don't think other people's money should be any of our business.

2.) There isn't strong evidence that Americans amass large amounts of inter-generational wealth. The vast majority of the wealthy are first generation wealthy and it's usually diffused rapidly.
topher06
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I'm fairly conservative, but the wealth gap we already have isn't promising for the long term viability of America. Estate tax fixed some of that so I'm good with an estate tax after some exemption. $5 million is plenty. This isn't a 100% tax of course.
30wedge
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topher06 said:

I'm fairly conservative, but the wealth gap we already have isn't promising for the long term viability of America. Estate tax fixed some of that so I'm good with an estate tax after some exemption. $5 million is plenty. This isn't a 100% tax of course.
Why should the fruits of someone be distributed to someone with less? How did the estate tax fix some of the wealth gap? Do you have specific examples of it doing so?

You don't sound conservative.
topher06
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Sure, google.com. I realize it isn't a popular position among Aggies, but care about as much as I care about what another Aggie is going to deem my political position based upon a single viewpoint.
Ribeye-Rare
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I'm certainly no billionaire, but the estate tax seems morally wrong.

As pointed out here, if a man can piss away his money on hookers and blow while he's living, he should likewise be allowed to choose those who can piss it away for him after he's gone.

Moreover, if our government had even a smidgen of a history of taking the dollars confiscated by the estate tax and spending them 'wisely', rather than pissing them away in the manner in which we all know they do, I might be more inclined to support such a concept. But, they most emphatically do not.

About the only good, I suppose, that possibly could come from the estate tax is that it might prompt the wealthy into thinking long and hard about supporting charitable works of which they approve and they select.

OTOH, if I've built a successful small business, including a farm or ranch operation, and I want my kids to continue on with it without fear that they'll have to sell it just to satisfy the estate tax, I'd have to say 'hell no'. Splitting up a large going concern would have a negative effect on many, including the business' customers, vendors and employees.

On top of all that, with our government literally creating fiat money by the trillions these days, I doubt the estate tax would do much to bring in a meaningful amount of revenue.

It all seems like the politics of class envy, and I say that as one who will (most likely) never be subject to paying a dime of estate tax.

I also acknowledge that most heirs don't appreciate inherited wealth, and that it ends up in many cases being squandered on the 'good life'. That's a shame, but it's nothing new. Solomon fretted about that same issue 3,000 years ago and wrote about it in the second chapter of Ecclesiastes.


Quote:

18 Yea, I hated all my labour which I had taken under the sun: because I should leave it unto the man that shall be after me.

19 And who knoweth whether he shall be a wise [man] or a fool? yet shall he have rule over all my labour wherein I have laboured, and wherein I have shewed myself wise under the sun. This [is] also vanity.
 
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