Significant tax reform is likely on the horizon. Given the proposals from President-elect Trump and the Republicans in Congress, we may see legislation repealing the current estate tax passed in 2017, and potentially changes to the gift and generation skipping transfer (GST) tax rules as well. In place of the current structure, a new capital gains tax regime could be created. In the midst of these changes, and in the aftermath, careful estate planning will remain of the utmost importance.
There is a global precedent for the removal of an estate tax, and these other regions still require estate planning services. Canada serves as one example of what the proposed tax reform may look like in the U.S., which could mean the implementation of a new capital gains tax at death. This proposed format may even offer benefits to the U.S. economy as a whole and the wealthy families affected by this change. However, the uncertainty regarding the future of tax law in the U.S. upholds the need for careful planning, guidance and flexibility within the estate plans of wealthy Americans.
Regardless of the end result of this proposed tax reform, it will not eliminate the need for wealth planning, which extends beyond the tax considerations. This is also evident from looking at global trends, as well as longstanding concerns in the U.S. regarding asset management and protection, succession planning and other legal issues. Maintaining flexibility in estate plans and continuing to rely on trusted advisors will be integral to navigating uncertainties and accommodating any potential changes that lie ahead over the next several years.
For further insight into the proposed tax reform, its potential impacts and the experiences of other regions outside the U.S., please refer to the white paper, “Trading Places: Global Lessons to Assist in Preparing for Possible Estate Tax Repeal.”