How Often Do Estate Planning Laws Change?

At the Law Offices of Daniel Hunt, we understand that Estate Planning law is always changing and your plans may evolve with it. Here are the near significant legal updates to keep in mind in 2021.

Probate Cut-Off

If your estate is worth $166,250 or less in 2021, you can avert probate (same equally in 2020). If your estate is worth more than that amount, a probate will be triggered upon your passing unless you take created a revocable living trust and transferred your assets properly into it.

Gift Tax Exclusion

The souvenir revenue enhancement exclusion amount in 2021 remains at $fifteen,000. That means that you can give up to $15,000 to equally many people every bit you wish without those gifts counting against your lifetime exemption. Speaking of which….

Federal Estate Tax Exemption

The Federal Estate and Gift Tax exemption has once over again increased to $xi.7 million per individual (or $23.four million for a married couple), upward from $11.58 1000000 in 2020. This ways that you can requite away $11.7 million of assets over the form of your life without attributable any Federal Estate tax.

Merely these numbers could soon be very different under the new presidential administration.

Biden Tax Proposals

President Joe Biden'southward taxation plan has proposed numerous changes that may touch your manor plan. Here are two of the biggest proposed changes:

1. Returning the estate tax and gift tax exemptions to 2009 levels (45% estate tax rate for estates over $3.five 1000000 and $1 million for gift revenue enhancement). As mentioned above, in 2021, every bit long as your estate is worth less than $eleven.7 million for an individual or $23.iv million for a married couple when you lot die, no estate taxation will be owed upon your death. You can also give away upwards to $15 k to equally many individuals equally you'd like without owing any gift revenue enhancement.

Under President Biden's proposed plan, those numbers would render to much lower levels last seen in 2009. The estate tax exemption rate would be $3.v million, making manor revenue enhancement once once more an important estate planning consideration for a much wider audience than it is today. The souvenir tax would exist $1 million per person.

two. Eliminating the footstep-up in ground. The current step-up in footing rule allows for your assets tax basis to footstep-up to the current fair market place value as of the date of your passing. Currently, if you own an asset that has appreciated profoundly in value (for example, a valuable piece of existent holding), information technology makes far more sense to wait until your decease to pass it on to your heirs. That'south considering the step-up in basis rule prevents them from needing to pay Capital Gains tax on the inherited property.

Repealing the stride-upwardly in basis would identify a heavier tax burden on trust beneficiaries and estate heirs. If the pace-up in ground rule is eliminated, you lot may want to alter your gifting strategy. It may be a good idea to encounter with one of our attorneys to discuss alternative estate planning techniques.

Fourth dimension Frame: Biden's tax plan likely will not exist passed into law until January 2022 at the earliest, just once passed, there's a run a risk information technology could be retroactive dorsum to January 2021. If y'all're concerned almost the effect these changes could accept on your estate plan, feel free to contact our role to schedule a trust review date.
California's Suggestion 19
In the November 2020 election, California voters approved Proposition 19. Prop xix carries some potential advantages every bit well as some potential disadvantages.

Starting on April 21, 2021, Prop 19 expands the group of homeowners who qualify for a transfer of their taxable value from their current home to a new property. Let's take a look at some cardinal changes nether Prop xix that are likely to exist advantageous:

Before: But homeowners who were over the age of 55 or disabled could motion to a new home while keeping the same taxable value as their former residence. Under Prop 19, this benefit will also exist extended to wildfire victims.
Before: The new dwelling had to be in the same canton as the sometime home. Under the new rules, you can move to any county in California.
Before: The value of the new abode had to be equal to or less than that of their new one. Under Prop xix, the value of the new habitation can be greater than the previous one as long every bit the increase in value is added to the transferred taxable value of the onetime domicile.

Now let'southward examine some potential disadvantages to some homeowners. Starting on Feb 16, 2021, parent-to-kid and grandparent-to-child transfers will accept a more express exemption. Here are fundamental points to know:

Transfers to children or grandchildren exterior of the principal residence will exist reassessed for property taxation. This includes backdrop that will be used as holiday rentals or as investment properties.
Exclusions still use for children/grandchildren who will utilize the master residence as their primary residence, upwards to a value of $i million.
If the holding value has increased by more than $1 million, a partial reassessment will occur. The $i million threshold amount will be adjusted for inflation starting in 2023 and every year thereafter.

For more details on how Prop nineteen could touch on your estate plan, check out our recent blog post on this topic. As always, feel free to contact our office if yous'd similar to run into with an chaser to discuss how these changes could affect you.

Law Offices of Daniel A. Hunt

The Law Offices of Daniel A. Hunt is a California constabulary firm specializing in Estate Planning; Trust Administration & Litigation; Probate; and Conservatorships. We've helped over 10,000 clients observe peace of mind. We serve clients throughout the greater Sacramento region and the country of California.