When a new, or incumbent, candidate is elected to become the next president of the United States of America, you can confidently assume that this new candidate will integrate their political agenda into the current tax code. Therefore, the United States tax code and many other relevant administrative rules are updated frequently to reflect the new political agendas of politicians and their constituents. Regardless of which side of the political spectrum you lean towards, it is often beneficial to review your estate planning documents before and shortly after an election.
When Donald Trump was first elected to serve as President, he promised many changes including an overhaul of the current tax legislation. Those changes include the 2017 Tax Cuts and Jobs Act, which among many other things, adjusted corporate and individual tax rates, changed income deductions for businesses, removed some fringe benefit deductions, increase credits for certain businesses, and much more. Due to changes in income tax regulation, the Tax Cuts and Jobs Act had a very large effect on small business owners and self-employed individuals. This legislation was passed in President Trump’s second year of presidency which shows how quickly tax and other legislation can be amended. The 2017 Tax Cuts and Jobs Act made it more profitable for certain types of businesses to reorganize themselves and incorporate different types of legal strategies to take advantage of various tax opportunities. The 2017 Tax Cuts and Jobs act was not the only legislation that affected estate planning. For example, the Secure Act in 2019 had a dramatic change on how and when an individual can take retirement distributions. Therefore, it is very important to be well prepared in terms of titling your assets, organizing your small business, and planning your estate to take advantage of new legislation and tax opportunities.
United States tax law was also quickly amended following President Barack Obama’s election to office back in 2008. Some of President Obama’s most famous tax legislation included the Making Work Pay Credit and the Affordable Care Act. Both the Making Work Pay Credit and Affordable Care Act had a substantial effect on U.S. taxpayers. These effects included a Medicare payroll tax for high earners and a new tax on investment income for high-income individuals. Many laws have changed since President Obama has been in office, including an approximate 500% increase in the estate exclusion amount from $2 million in 2008 to $11.58 million in 2020. A 500% increase in the estate exclusion amount is a substantial modification in estate legislation and one of the many changing laws that you will want to speak to your estate planning attorney about.
As you can see, with every new presidency (or re-election of an incumbent candidate) there usually follows a modification in current tax law. With tax law changes come varying strategies for individuals and families to update their legal documents to take advantage of the new legislation or lock-in prior legislation benefits. The uncertainty presented by the election of a new president serves as a good reminder to consult with your estate planning attorney to ensure you and your family are adequately prepared in the current tax environment. The attorneys at Wakefield Law, P.C. are happy to help you and your loved ones through the new election period and ensure that you are adequately prepared. Reach out to David B. Wakefield at david@wakefieldlawpc.com or 248-457-9860 to set up an appointment today!
*This article is meant for informational purposes only. Please recognize that nothing in this article constitutes legal advice. If you have any questions, comments, or seek legal assistance, please call one of the attorneys at Wakefield Law, P.C.