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Donald Trump's Estate Tax Plan

President-elect Donald Trump rode to victory thanks to support by lower and middle class voters in the heartland who are looking for jobs to return to their towns. Nonetheless, the billionaire has also outlined a plan to eliminate federal estate taxes, which would likely benefit the super-wealthy.

According to an article on CNBC.com that includes statements by House Ways and Means Committee Chairman Kevin Brady and Senate Finance Chairman Orrin Hatch, the Trump presidency could and should end to the "death tax" (a politicized label for estate tax), which they claim would allow small family businesses and farms to be passed along to offspring. Under the 2016 federal tax rules, a person can gift up to $5.45 million to their heirs ($10.9 million for married couples) tax free. Any amount over that is taxed at 40 percent.

New Jersey and other states

There are currently 15 states and the District of Columbia who have their own additional estate taxes, including New Jersey, New York, Connecticut and Maryland. New Jersey is also one of the few states to impose both an estate tax and an inheritance tax. Inheritance tax applies when someone leaves property or assets to someone who isn't a close relative. The tax rate varies in these instances with the closer relatives having a lower tax rate than inheritors who are not related.

What does Trump want to do?

Donald Trump the candidate has been known to change his mind, but he made repealing the estate tax one of the few concrete points in his tax plan. The Trump plan calls for a repeal of the estate tax left to heirs, but adds a capital gains tax upon heirs receiving more than $10 million. Estate tax experts are doubtful that Trump's plan will pass the Democrat-controlled Senate, but folks have mistakenly counted out the candidate before. If it does pass, it looks like Trump is replacing estate tax with a capital gains tax levied at time of death at the lower rate of 20 percent when the inheritor sells the asset.

The upshot

Experts agree that this Trump plan could help concentrate wealth among a select group of the super-wealthy families. Regardless of the true outcome once Trump is in office, the Trump presidency will likely have a huge impact upon the world of estate planning, wills and trusts. The financial landscape will shift as new laws are hammered out.

The best advice for those looking at estate planning would be to speak with a lawyer who is on top of these changes at a federal and state level. They have the financial and legal background to make sure everything is done properly. This helps to ensure that the results are what each client has planned for.

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