Presidential elections have great influence. New agendas are written. New proposals and laws are advanced. The country leans in different directions.
This trickle down effect may have some impact in the estate planning field after November 2016. Of course, without a real crystal ball it is difficult to predict just what kind of new rules and regulations may come into play regarding estate planning in the United States. Often times, campaign pledges remain just that – promises. Here are some suggested scenarios to be aware of depending on who becomes president.
Democratic: Hillary Clinton is the nominee. During the past four years there has been a Democratic president and a Republican Congress. As a result there was no real change in general estate planning principles. The estate tax exemption remains at $5.4 million for an individual. If Clinton wins, she is known to support President Obama’s desire to move that figure to $3.5 million (back to the 2009 figure) and to hike the estate tax rate up to 45% from 40%. Those moves may never happen, however, since the Democrats would likely have to win control of both the Congress and the Senate, a scenario many political pundits have predicted will not happen. Assuming a Clinton win and the Congress and Senate remain in Republican control, it is not likely there will be any tangible movement along these lines.
Republican: If Donald Trump wins, he has said he wants to eliminate the estate tax completely. If the Senate and House of Representatives remain Republican, Trump may have a major impact on estate planning rules.
Other topics to watch, despite who wins, are in the area generally of taxes, gift taxes, Grantor Retained Annuity Trusts (GRATS), Dynasty Trusts and Intra-Family Discounting. GRATS, for example, are financial instruments in the U.S. which allow someone to make substantial financial gifts to family members without paying a gift tax. Donations are made into a trust whereby the donor receives an annual payment and what is left over after a term is given to beneficiaries with no gift tax implications. If you have an interest in any of these spheres, you should probably stay abreast of the news and maintain contact with your estate planning attorney and accountant.
There are also some important tangential areas to be monitoring such as Social Security, healthcare and Medicare. These are important topics, especially to middle age and above persons, and they may have a direct effect on estate planning.
Clinton supports Obamacare and is opposed to high drug prices and her “affordable healthcare drug” drug platform backs legalizing prescription drug imports from Canada. Trump wants to eliminate Obamacare and it is not clear what the replacement is.
Some Republicans want to privatize Social Security and raise the normal retirement age from 67 to 69. That would mean many persons will be working longer than they expected. Clinton is opposed to privatization and would likely keep current rules in place. Republicans have also indicated they may want to raise the Medicare eligibility age. All this could have an impact on one’s financial status. A good way to get a better understanding of the current presidential candidates’ positions is to visit their respective website and read their policy positions.
If you are contemplating executing an estate plan for the first time, experienced counsel can guide you through current and possible changes in the law. If you have an existing plan and read that laws may change or see that a law has changed, then you should have a consultation with an experienced estate planning attorney to review your current plan and see if any updating is necessary. Despite what happens with policymakers, a good rule of thumb is to review your estate plan at least once a year.