In late March, a coalition of Senate Democrats introduced the Sensible Taxation and Equity Promotion (STEP) Act. The act would get rid of what’s known as the step-up in basis to tax the unrealized gains of certain estates at death.
Step-up in basis refers to the way the value of an asset is readjusted for tax purposes upon inheritance. Under current rules, assets pass to heirs at the current market price, not the owner’s original cost. That means no capital gains are realized, and no taxes are due.
Under the STEP Act plan, up to $1 million in unrealized capital gains would be excluded from the tax. For example, let’s say you expect to leave your children $5 million in stocks you purchased for $3 million. Under STEP, $1 million of the $2 million increase in value would be subject to capital gains.
The same rules would apply to gifts, with capital gains realized on the date of the gift. The law would also eliminate the use of trusts as a tool to avoid the tax.
Currently, estates valued above $11.2 million may be subject to a 40% estate tax upon inheritance. The STEP Act is written such that those estates are not subject to double taxation, because any tax paid under STEP would be deductible for estate tax purposes.
In addition to the $1 million capital gains exemption, there would be an additional exclusion of up to $500,000 for personal residences. Assets in retirement accounts would continue to be exempt.
Critics say the bill would be a severe blow to family farms and other businesses that transfer to the next generation. But advocates argue that heirs who intend to continue operating those assets will have 15 years to pay the tax.
As drafted, the tax would be retroactive to January 1, 2021, if the measure is enacted. Talk to a lawyer to determine the possible impact on your estate plans.
Telecommuting is the new normal for many employers who never would have considered such an arrangement in the past.
Employers with out-of-state remote workers should consult with a lawyer to discuss associated legal risks and develop policies to address them
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, which passed in late 2019, was only the start of changes for the retirement industry. A bipartisan bill, which has been nicknamed “SECURE Act 2.0,” is in the works.
A new federal law targets wealthy buyers who purchase high-priced homes and commercial properties through anonymous shell companies. The law is designed to combat money laundering and stop the flow of illicit money into U.S. real estate.
For people who want to work while collecting Social Security, the “retirement earnings test” (RET) rules can be confusing. Some people think they’ll lose out on benefits if they continue to work, but that’s not true.
If you are in a committed relationship but are not married to your partner, estate planning is essential. Unless you each draft a will and designate the other person as a beneficiary, your assets will pass to other family members and your partner will receive nothing when you die. Further, without proper planning you won’t
When setting up a will and other estate planning documents, many clients are concerned about making the most efficient use of their attorney’s time. While these meetings are bound to raise some questions you hadn’t thought of, there are things you can do to prepare.
The more thought you put into certain goals and wishes (including those below), the easier it is for your attorney to create a set of documents that reflects your intentions.