Did you catch President Obama's State of the Union address last week? Make note of these interesting estate planning developments.
President Obama rode into office, in part, by promising to increase taxes on the wealthiest people in the country. So far during his term in office he has done much to follow through on that promise and he has often had success in doing so. Even though he now faces a Republican-controlled House of Representatives and Senate, the President announced proposals for more taxes on wealthy Americans in his State of the Union address as foreshadowed by Forbes in "President Obama Targets The 'Angel Of Death' Capital Gains Tax Loophole."
First, the President announced that he wishes to raise the capital gains tax rate from the current 23.8% to 28%. He also announced that he will be seeking to close what some have called the biggest loophole in the tax code, allowing people to inherit appreciated investments without paying capital gains tax on it.
For example, currently if someone inherits a stock certificate that was purchased for $100 and is now worth $5000, no capital gains tax is due. The President wants to change that to make it so capital gains tax would be due as part of the deceased's final tax return. He is proposing an exception that no capital gains tax would be due until a surviving spouse dies and an exemption for the first $100,000 for single people, which doubles for married couples.
If these proposals were to pass, the implications would be huge. However, it is very unlikely that either proposal will make it through the current Congress.
Do you have a hard time keeping up with the ever changing estate planning laws? Contact Heritage to meet with an attorney who can help you better understand how these laws will impact you and your loved ones.
Reference: Forbes (January 18, 2015) "President Obama Targets The 'Angel Of Death' Capital Gains Tax Loophole"