The tax reform plan released by the White House and the congressional Republicans includes many parts. One of them is taking away the federal estate tax or death tax. This is not the first time estate taxes have been discussed, as many lawmakers feel that they are a double form of taxation.
Eliminating the death tax would have many benefits; which include simplified estate planning and avoiding the need to go through lengthy steps to avoid a tax bill to the IRS. With that said, if it is removed, planning with an experienced estate planning attorney in Jackson MS remains just as important.
Here are a few things to consider:
- You need to choose where your assets go.
Estate planning remains essential for this very simple reason: you must decide where you want your assets to go. If you have complicated family dynamics, a comprehensive plan is even more important. Through estate planning, you can address minor children or children from multiple marriages. Your children will thank you.
- Your state may still charge estate taxes.
Unfortunately, federal law cannot tell individual states how to tax their residents. So, while the tax reform can do away with the estate tax under the federal law, it’s possible that your state may have some form of it. The good news is that most states do not have one, but 14 of them still do and six states also have an inheritance tax. Happily, Mississippi doesn’t have either.
- You could be subject to capital gains tax liability.
Under the current federal law, taxpayers who are subject to estate taxes may get a step-up in the tax basis of inherited assets. If the death tax goes away, it’s possible that the step-up in basis might, too. If this is the case, heirs would have to take capital gains tax liability into consideration.
Taxes are often complicated to understand, which is why it can help to work with an estate planning attorney in Jackson, MS. You wouldn’t want to leave thousands of dollars on the table, would you?
