HYANNIS, Mass., Aug. 10, 2021 /PRNewswire/ — Under President Biden’s tax plan, families may need to take steps to protect their assets. The president has proposed to nearly double the top tax rate on capital gains and to eliminate a tax benefit on appreciated assets known as the "step-up in basis." If adopted, Biden’s proposals will create a new capital gains rate of 39.6% on gains exceeding $1 million.
Senators Bernie Sanders (D-VT) and Chris Van Hollen (D-MD) are also offering proposals that, if adopted, will increase the tax burden on families. Senator Sanders’ proposal lowers the estate tax exemption from $11.7 million to $3.5 million. This proposal would also increase the tax rates on estate, gift and GST taxes to rates ranging from 45% to 65%. Under Senator Van Hollen’s proposal, transfers that are now income tax-free (gifts, transfers to non-grantor trusts, and transfers at death) will trigger a capital gains tax on all unrealized appreciation. Senator Van Hollen’s proposal is retro-active to January 1, 2021, making proactive planning during the balance of this year more difficult, but not impossible.
A higher capital gains rate and the repeal of step-up in basis could raise the total tax rate as high as 61 percent or more for some families. "The wealth that many families have accumulated through hard work and wise planning could be devastated if these proposals take effect," according to Cape Cod estate planning attorney F. Keats Boyd, III. "It is the intersection of the proposals of the President, Senators Sanders and Van Hollen that will catch many families by surprise. The key to protecting an estate is vigilant tax planning that should begin now."
According to Attorney Boyd "I recently explained how this could impact a client. The client owns and employs a child at an apartment complex. Over many years the client upgraded the apartments and invested in the building, but the cost basis was near $0 after depreciation. Under the proposed laws, the client is facing a potential capital gains tax at death of $2.3 million and a potential estate tax of $1.3 million. The combined estate and capital gains tax will force the sale of the complex, and the child working at the apartments will lose their job.The child’s share of the estate will be too small to live on. Fortunately, we have planning alternatives that will reduce the potential taxes by as much as 50%, preventing a forced sale of the complex."
To learn more about how proposed tax laws may impact you & your family, a free webinar is available at www.boydandboydpc.com/seminars. Boyd & Boyd, P.C. helps families reduce their tax burden, plan for the future, and protect their wealth.
For more information:
Law Offices of Boyd & Boyd, P.C.
1060 Falmouth Road, Suite B
Hyannis, Massachusetts 02601
Phone: (508) 444-9688
Email:
316227@email4pr.com
Media Contact:
Keats Boyd
(508) 775-7800
316227@email4pr.com
SOURCE F. Keats Boyd III
