Brian T. Whitlock has published his column, UNTAXINGLY YOURS—2020 Foresight: Time to Fully Fund ILITs, (Sep. 19, 2019), in Taxes Magazine. His article begins as follows:
With the 2020 General Election a little over a year away and a large field of Democrats vying for both the Presidency and numerous Senate seats, it is perhaps an appropriate time to gaze into our tax crystal balls and anticipate some tax planning moves for 2020.
The Estate Tax Proposals of the Presidential Hopefuls
Elizabeth Warren and Bernie Sanders are beating their respective campaign drums and trying to rally support for the repeal of some or all of the Tax Cuts and Jobs Act of 2017 (TCJA). The most common proposal focuses on making the Federal Gift and Estate Tax more progressive by:
Increasing the top Gift and Estate Tax rates;
Reducing the Applicable Credit Equivalent from $11.4 million currently to $3.5 million; and
Restricting either the amount of the Gift Tax Annual Exclusion or limiting the total of Gift Tax Exclusions
that can be claimed in any one year.
The Timing of Change
If both the White House and the Senate swing significantly in favor of the Democrats in November 2020, significant tax legislation will likely be proposed in early 2021 after the newly elected are officially sworn in. The effective date of proposed legislation typically coincides with the date that the tax bill is first introduced on the floor of Congress. While this could theoretically occur in late November or December of 2020, the more likely effective date as with TCJA would be January 1.
Planning fever will likely strike immediately after the election. The fear of not knowing what legislation might be advanced could result in a flurry of activity among our high net worth clients. For a recent example, we need look back no further than December of 2012 when the threatened sunset of the $3.5 million Applicable Credit Equivalent Amount prompted many planners to encourage their clients to make large transfers before December 31, 2012, least they risk losing any of the unused Applicable Credit Equivalent Amount.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.