New York Estate Planning & Elder Law Blog
On the heels of top Senate Republicans introducing legislation to fully repeal the federal estate tax, former Democratic presidential candidate Senator Bernie Sanders recently proposed to expand the estate tax on America’s wealthiest families. The proposal would create a 77 percent tax on the estates valued over $1 billion, a policy that would affect as little as 0.2 percent of Americans.
Senator Sanders’ proposal would levy a 45 percent tax on the value of estates between $3.5 million and $10 million, increasing gradually to 77 percent for estates valued at more than $1 billion. Under the current tax system, assets in estates valued over $11 million for individuals and $22 million for married couples are taxed at 40 percent.
The plan’s summary claims the measure would take in an estimated $2.2 trillion in revenue rom the families of all 588 billionaires in the country with a combined net worth of more than $3 trillion. Senator Sanders is one of many would be nominee for the Democrat ticket for the 2020 presidential election putting forth ideas on taxing America’s wealthiest families to bridge what the party sees as a growing economic equality gap in the country.
Whether or not the proposals by Senator Sanders or others go into effect, most Americans will continue to avoid the estate tax altogether, as even current federal estate tax rates only apply to a few thousands families. Many states either have no estate tax or have rates tied to those of the federal government, meaning very few will pay estate taxes.
In cases where families would have to pay estate taxes if the bulk of assets were allowed to pass through probate, a trust and estates lawyer can help set up certain types of trusts to shield these assets from taxation and provide the most benefit for heirs. This can include creating life trusts that are funded with assets while the individual is still alive and will automatically pass on to intended beneficiaries upon the testator’s death.
Whether you are subject to the estate tax or not, you will need to make a last will and testament, powers of attorney, and medical directives part of your estate plan to protect your assets and your family against undue hardship. Regardless of wealth, a proper estate plan requires planning and attention to detail to create maximum benefit.