Under Trump’s proposed plan, tracking the
cost basis beyond the decedent’s death
would be required. This often creates a
tremendous amount of recordkeeping
since cost basis can be difficult to track,
especially for older property, reinvested
dividends, partnership interests, and real
estate assets. Under today’s system, a
decedent’s assets are “stepped-up” or
“stepped-down” to fair market value at the
date of death (or, if applicable, six months
later), which resets the basis. The original
cost basis no longer applies except for
items that have deferred income such as
taxable retirement accounts and annuities.
Currently, there is also an annual federal
gift tax exclusion of $14,000 per donee
($28,000 if a married couple elects to “gift
split”). This is separate from the combined
lifetime estate and gift tax exemption. It is
unlikely the gift tax would be eliminated,
although the rules could be modified.
4 Key Estate Planning Strategies
In light of tax reform uncertainty, here are
four considerations for an individual or
married couple to effectively structure an
estate plan:
1. If your estate is less than $5.49 million
(or $10.98 million for married couples),
don’t assume that you do not need an
estate plan.
Individuals or married couples with less
than $5 million or $10 million in assets
may have more challenges than a larger
estate. Complexities may arise from having
a closely held business, a blended family,
a special needs child or a number of other
factors. In addition, estate planning may
be done for other reasons such as asset
protection against divorce, creditors and
lawsuits.
2. Have your current estate planning
documents and estate plan reviewed by
a qualified estate planning advisor.
It is critical to understand the current
“state of your estate.” Do you know and
understand the important terms of your
estate planning documents, how your
estate plan is structured and what would
happen upon your death? A simulation
of the events that would occur upon your
death can provide clarity and identify those
areas that need your attention.
Download a copy of
“Top 10 Estate Planning
Mistakes” at
brownsmithwallace.com/
Estate-Plan-Top-10
3. Confirm there is flexibility built into
your estate plan and determine whether
your documents need to be updated.
Flexibility within your documents may
protect against future changes in the law
and provide your spouse and/or heirs
with important options. Clauses and
formulas commonly used in the past could
potentially have very different or disastrous
results under the current or future transfer
tax system.
4. Do not be paralyzed to make decisions
or wait until the law is “settled.”
Your current plan may not be in line with
your goals and desires, and tax laws will
change several times throughout your
lifetime.
As seen in the
St. Louis Business Journal
online edition
David Heilich
CPA, AEP
Partner,
Family Wealth Planning
Practice Leader
Brown Smith Wallace
314.983.1273
[email protected]
9