On Thursday, November 2, House Republicans unveiled their much anticipated plan to overhaul the tax code in the Tax Cuts and Jobs Act. While it is still just a proposal, one aspect of the plan would eliminate the so-called “death tax” by 2024.

Under the current tax code, taxpayers can pass on, up to $5.49 million to their heirs, tax-free. For married couples, it’s nearly $11 million. For anything above that amount, your estate and beneficiaries have to pay a federal estate tax of 40 percent. In addition, there are also several states as well as the District of Columbia that assess an estate tax. Having to pay, or finding ways to minimize estate taxes, has been a major part of estate planning for high net worth individuals ever since such taxes were imposed way back in 1917.

Under the proposed Tax Cuts and Jobs Act, the federal estate tax exemption will first double, and then be repealed as of 2024. In addition, the proposed legislation calls for a continuation of what is known as a “step-up in basis.” Under current law, the “tax basis” of a property held by a decedent is “stepped up,” to full market value at the date of death so that all appreciation before death escapes capital gains tax. Trumps original proposed tax reform plan proposed by in December, called for the elimination of the “step up basis,” the Act keeps the provision.

How MBAF Can Help

We realize that estate planning for high net worth individuals is designed for the long term, and many of your strategies are already in place, and may, or may not, be impacted by the proposed legislation.

However, we also realize that good estate planning strategies are designed to be flexible. There may be options and opportunities that the increased exemption limits, and the eventual repeal of the estate tax, could create that you may not be aware of.

We can help you to evaluate your current estate tax strategies in light of the proposed changes and your individual circumstances.

Compliance with and understanding the tax codes regarding valuation and estate planning can be complex. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Tax and Accounting Specialists, or call us at 1-800-239-1474.