Inheritance Tax Law Changes & Estate Planning
Sensible Taxation and Equity Promotion (STEP) Act and
How it Affects You
In 2021 the Sensible Taxation and Equity Promotion or (STEP) act was proposed by US senators with the goal of the proposed act being to close stepped-up basis loophole by taxing unrealized capital gains when heirs inherit huge fortunes on which the original owner never paid income taxes. This stepped-up basis loophole has allowed a little over half of the wealth in estates worth over one hundred million dollars to never be subjected to any income taxes.
Because of this, the act aims to target wealthier Americans that the senators claim are only minorly, if at all, affected by income tax due to the fact that their often comes from passed down wealth or a trust rather than working. The act would affect the heirs of trusts who are in the multi-million range and would work in a way the protects smaller trusts or businesses by allowing individuals to exclude one million dollars of unrealized capital gain from this tax on top of the five hundred thousand exclusion that already exists for personal residences and assets held in retirement accounts. If passed, it is likely that the majority of the population will not feel the ramifications of the STEP Act due to the large amount of money needed to become applicable for the tax.
Though this has been considered in Congress for a while now, it will likely not be passed, but does serve as a reminder for the American people to protect their estate and assets in the case of an unexpected death. Having an attorney who is skilled in estate planning can be very important in the process of protecting your assets and assuring that your estate is allocated in the way you want.
An estate planning attorney can help your estate by assisting in guiding you through any possible changes in the law, such as the STEP act mentioned above, that may affect your assets, estate, or trust.
Probating a Will can also be stressful for the executor and possible heirs to the Will, and by planning it out with an estate planning attorney or probate attorney, you are making their lives easier during a very stressful time. Other complications may arise during the probate process, especially when you have no Will, and by using with an estate planning attorney, it is possible to save money in the long run, even if your estate is not subject to the inheritance tax.
By Ben Surret