Wealthy Americans are flocking to their estate planning attorneys out of fear that Joe Biden will win the election and raise taxes, according to Reuters.
Of most concern to the affluent would be a “Blue Wave,” in which Democrats win both the White House, control of the Senate and hold the House – which could mean that an exemption allowing individuals to leave up to $11.58 million tax-free to heirs would be cut before it’s set to expire in 2025.
Democrats want to raise estate taxes to the “historical norm,” according to the party’s platform. That could mean slashing the exemption to $5.49 million, the figure in place before Republican President Donald Trump signed a sweeping tax bill that included benefits for corporations and wealthy Americans in 2017, advisers said.
It is unclear how the election will go or what, if any, tax reform will pass. But as Biden has climbed in the polls, rich people are rushing to set up trusts and revise existing ones before year-end to avoid 2021 tax consequences, advisers said. –Reuters
“The $11.58 million question is, ‘What is going to happen to the gift and estate tax exclusion?’” according to Toni Ann Kruse, a NY estate planning attorney who serves ultra-high net worth clients. “We don’t know who will win the election or control the House or Senate – and all of those factors will play into what could happen.”
According to Biden’s campaign website, he would “return the estate tax to 2009 levels” in order to fund paid family and medical leave. He would also raise taxes on long-term capital gains, while those making above $1 million per year would pay a 39.6% income tax on profit, vs. the current tiered approach which maxes out at 20% for those making $441,450 or more.
“Joe Biden is running to rebuild the backbone of this nation – the American middle class – by ensuring that our economy rewards work and not just wealth,” said campaign spokesman Andrew Bates.
According to the report, estate planning attorneys began seeing an uptick in client activity when Biden pulled ahead of Trump in the polls, with several firms reporting an overwhelming volume of requests.
“We are flooded with requests for gift and estate tax appraisals right now,” said Jonathan Miller, CEO at New York-based real estate appraisal firm, Miller Samuel, Inc.
New York estate and tax planning lawyer Philip Michaels has added around 15 high net worth clients during the last several months who are revising estate plans.
Rockefeller Capital Management, a family office in New York, is holding virtual events for customers while working with legal and tax advisers to sort through nuances of possible legislation, said Joe Roberts, Senior Wealth Strategist. –Reuters
“It’s a lot of money to give away,” said Indianapolis estate planning attorney, John Olivieri. “People are struggling with, ‘Do I really want to give this away?’”