Estate Planning Environment under President Joe Biden

On January 20, 2021, Joe Biden was inaugurated as the 46th President of the United States of America. Financial and legal advisors have been combing through President Biden’s proposed tax plan for months in preparation for this possibility and the direct impact it could have on many of their clients. Estate planning attorneys are no different, as there are potentially significant estate tax implications brought forth by the proposed plan that could result in the necessary overhaul of many clients’ current estate plans.


According to the estate tax laws for 2021, the federal gift and estate tax exemption amount (the amount that an individual can transfer without paying any taxes) for an individual is $11.7 million dollars. For married couples, this means $23.4 million of available exemption. In New York State, the 2021 individual exemption amount is $5.93 million, and the following years will see these amounts rise even higher as they are adjusted for inflation. However, the current laws controlling the Federal exemption amount are set to sunset (expire) as of December 31, 2025. January 1, 2026 will see these exemptions reduced by nearly 50%.


President Biden has outlined numerous potential changes he would like to make to the estate tax landscape during his administration. One change most estate planning attorneys and financial advisors note is the potential for accelerating the sunset for the current exemption amounts. President Biden has indicated that he would like to bring the exemption amounts as low as $3.5 million per individual. In addition, President Biden has also discussed potential increases to capital gains taxes and removing the “step-up in basis” provisions of the current tax code that have allowed clients numerous tax-saving opportunities in the past. Both changes could drastically impact most clients’ current estate plan.


The shift from former President Trump to President Biden should provide clients with the impetus to begin an open dialogue with their financial and legal advisors regarding the potentially shifting estate-tax environment. Many advisors may see clients making large gifts in anticipation of the regime change in the coming months. Estate planning attorneys in particular are placing a premium on flexible plans which allow clients of any net-worth to weather the unknown political environment and numerous potential tax law changes. For those who are unsure whether now is the right time to make changes to their estate plan, you should have a little time to decide as it is likely that any tax changes related to estate taxes will be delayed as President Biden first tackles what many consider to be key priorities for his incoming administration (including the current COVID-19 pandemic and the economic stress felt by many).


In the event any of these changes come to fruition in the very near future, many clients will be looking to their attorneys and advisors to assist with what will likely become more sophisticated, expanded, and tailored planning than what has been traditionally needed in the past to avoid large tax bills upon death. Clients can be assured that their advisors are closely watching these potential changes and are always available to strategize any possible tax landscape and resulting changes to a client’s current plan. Estate planning has always faced a certain amount of uncertainty based on the natural fluidity that can accompany changes in laws – it is this comfort with uncertainty that will allow estate planning attorneys and advisors to help clients make the best choices for not only their futures, but the financial futures and well-being of their families for decades to come, no matter the political backdrop.


If you have any questions about this Legal Briefing, please contact any member of the firm at (585) 730-4773.

This Legal Briefing is intended for general informational and educational purposes only and should not be considered legal advice or counsel. The substance of this Legal Briefing is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2021 Law Offices of Pullano & Farrow PLLC

CONNECT

Subscribe to our e-newsletter to receive legal briefings, news, and event invitations, delivered right to your mailbox.

PHONE  585.730.4773

FAX 888.971.3736

ADDRESS

69 Cascade Drive Suite 307

Rochester, New York 14614

HOURS

Monday - Friday: 8am - 5pm

Saturday - Sunday: Closed

SERVICES

Corporate | Health Care | Trusts & Estates

Labor & Employment | Litigation | Real Estate

Personal Injury & Wrongful Death

INDUSTRIES

Agribusiness | Small Business & Entrepreneurship

Hospitality | Not-for-Profits 

Sports & Entertainment Education & Child Care

Construction & Land Development 

Serving clients  throughout the Finger Lakes region and across New York State, including Rochester, Buffalo, Syracuse, Utica, Rome, Oneida, Binghamton, Elmira, Watertown, Niagara, Jamestown, Oswego, Cayuga, Oneonta, Schenectady, and Albany.

© 2013-2021  Law Offices of Pullano & Farrow PLLC. Legal Disclaimer.   Statement of Client Rights & Responsibilities

Attorney Advertising. All rights reserved.