New York Estate Planning & Elder Law Blog
Three of the Senate’s top Republicans recently introduced a plan to repeal the federal estate tax completely, a move that would save potentially billions of dollars for a small number of ultra wealthy families in America. The move comes after the 2017 tax cuts signed by President Donald Trump that significantly increased the estate tax threshold from $11 million for married couples to more than $22 million for the same filers.
Senate Majority Leader Mitch McConnell (R-Ky.) joined Sens. Charles E. Grassley (R-Iowa) and John Thune (R-SD), all members of the Senate Finance Committee, introduced the legislation to end what conservatives call the “death tax.” Those in favor of repealing the federal estate tax frequently make the argument that the tax is inherently unfair since it places an additional tax on money already taxed by the federal government.
A year after the tax reforms took effect, an estimated 5,000 families filed estate tax returns, that according to projections by the American College of Trust and Estate Counsel, an organization of estate attorneys, based on Internal Revenue Service data. Of that number, only about 1,700 families each year end up actually paying federal estate taxes. The move is expected to anger many Democrats in Congress, as some prominent party members proposed their own modification to taxing estates, namely steep increases for ultra-wealthy families.
Before the 2017 tax reforms took place, the federal estate tax threshold stood at $5.54 million which meant individuals could pass millions in wealth onto their heirs without any additional taxes. Any assets passed on above the threshold would see a 40 percent federal tax but since the 2017 law went into effect, very few families have been subject to the tax and will comprise about 0.6 percent of the federal budget in 2018, down from more than 1 percent in the 2000s
Whether or not Republicans get their wish to repeal the estate tax altogether or Democrats institute their brand of so-called “wealth taxes,” average families will not suffer any repercussions either way and will continue with the traditional probate process. That traditional probate process will always include filing a last will and testament along with a petition for probate to the court, accounting for assets, and ultimately dispersing these assets to heirs, family members, and other beneficiaries named by the deceased person in accordance with his or her final wishes.