Estate Tax Repeal: The Unexpected Consequences for the Wealthy

Ever wondered how tax law changes could impact your estate plans? A recent proposal to repeal the estate tax promises to shake things up, but it’s not all sunshine and roses for America’s wealthy. The estate tax, or as some refer to it, the death tax, is a 40% levy on property transferred at death. Currently, it only affects a tiny fraction of the population. In 2022, for instance, a mere 0.1% of decedents had estates hefty enough to incur the tax. That’s because the current exemption is a staggering $13.99 million for individuals and $27.98 million for couples. If the much-talked-about Death Tax Repeal Act passes, these estates would no longer face a federal transfer tax. Seems like a win for the wealthy, right? Not so fast! Ironically, the repeal could complicate estate planning for the rich. While it’s true that it would eliminate the estate tax, the wealthy might not save as much as they think. Plus, the long-term impact on federal budget is significant. Also, it’s worth remembering that the estate tax encourages charitable giving and helps reduce inequality. Considering the upcoming ‘largest wealth transfer in human history,’ with baby boomers expected to pass down an estimated $84 trillion to their heirs, the stakes are high. Whether you’re directly affected or not, it’s clear that changes to estate tax law could have far-reaching consequences. It’s a good time to review your estate plan and stay informed about these potential changes.

Source: theconversation.com