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Trump Presidency and Taxes: What’s Next?

AdobeStock_78299489-300x211By Paul T. Czepiga

Wow.  What a difference a few weeks can make.

Donald Trump’s election to the Presidency has all those political pundits, talking heads, and pollsters re-examining the old shiboleths and trying to be prognosticians.

Well, I won’t try to be a fortune teller, but I will pass on what I just heard.

I recently spent an entire day at the New England Tax Institute. There were speakers from Washington D.C.’s largest law firms and nationally known speakers. These speakers have their fingers more on the nation’s economic and tax pulse than I do and I will cede to them the task of predicting the future.

My two takeaways from the Institute:

  1. Even nationally known lawyers and tax experts do not agree on what might happen.
  2. President-elect Trump has political capital, but he has to spend it carefully and will not be able to fulfill all his campaign promises all at once. It is not likely that estate tax reform will be a priority the first ‘go round.

So, what do you do?

Answer: What you have always done, which is to plan based on a foundation of known facts, and not speculation and hype. The known facts are:

  1. Connecticut’s estate tax and related laws are NOT changing so, for those of you with estates over $2 million, there is still a need to plan; and
  2. Regardless of what might happen to the federal estate tax, income tax issues such as deferring income taxes on large IRA accumulations and planning how to utilize step-up in basis at death (or not) remain

BUT whether you have exposure to Federal or Connecticut estate tax is arguably less relevant than making sure that your hard earned assets at your death pass to the right beneficiaries in the right amount at the right time. If you have unique assets (such as a closely held business) or beneficiaries who need some oversight due to a disability or just poor financial management skills, you still need an estate plan—estate taxes are secondary.

So don’t get caught up in the hype and don’t try to predict the future. From an estate planning view, deal with what you know. Make sure that if you are disabled, your financial power of attorney is current (Connecticut has a new law effective October 1, 2016), your health care directives are up to date. And make sure your Will or Trust reflect your current wishes.

And sleep tight and stay tuned.

 

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