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As with any presidential election, there are many serious issues at stake, to say nothing of the personality clash this election cycle.  I don’t rate estate taxes as the issue to swing my vote, but for advising clients about where the estate tax may be headed in the future, it is useful to look at the positions of the two candidates. 

For many years estate taxes have been a political football, with wildly fluctuating numbers.  This has created problems, and to be fair, opportunities in the estate planning world.  With the 2011 budget deal, a number of taxes were “locked” into place, with no sunset provisions.  One of those numbers was the estate tax exclusion amount, now set to adjust with inflation.  In 2016, if your estate is larger than $5.43 million, you’ll pay a 40% estate tax. 

Now, if the estate tax exclusion amount is to be changed, Congress will have to take the issue up and get a Presidential signature. 


Hilary Clinton’s position post-primary is to raise the estate tax to as high as 65% for estates over $500 million, and 50% for estates larger than $10 million.  While these proposals will impact very few Americans, her proposals to end valuation “loopholes” could impact a number of small business owners and farmers. 

You can read more about her plan here: https://www.hillaryclinton.com/briefing/factsheets/2016/01/12/investing-in-america-by-restoring-basic-fairness-to-our-tax-code/


Donald Trump’s current proposal is to replace the estate tax with a capital gains tax, essentially treating the assets as being “sold” to the beneficiaries, who would then owe taxes on the gain in value.  Essentially that means a 20% estate tax for estates valued over $10 million.  The key difference, besides the tax rate, would be in how the tax gets applied.  Under this proposal, the basis number becomes an important number to track, something that previously hasn’t been a factor.  Current law resets the property’s basis to the current value when it is inherited. 

You can read more about his plan here: https://www.donaldjtrump.com/policies/tax-plan/?/positions/tax-reform

Bottom Line

The short story is: for estates under $5 million, you shouldn’t need to worry about estate taxes, now, or in the foreseeable future.  For those of you with larger estates, there are many options to plan for the future.