When President Obama proposed increasing the capital gains tax at death, he probably did not foresee that the proposal would lead to a renewed effort to repeal the estate tax. However, it has done exactly that.
Currently, if a business owner passes away, then his or her heirs possibly only have to pay one tax on the inheritance: the estate tax. After the American Taxpayer Relief Act of 2012, the estate tax exemption amount is a permanent $5 million as indexed annually for inflation. That makes the exemption $5.43 million per taxpayer in 2015.
However, under President Obama’s budget proposal, those heirs might also have to pay capital gains on the amount that the inherited business has appreciated.
This has caused many family business owners and farmers to cry foul as reported by Roll Call in a recent article titled “Obama’s Double Death Tax.”
The biggest issue for business owners is that the double taxation makes it more likely that the business or portions of it will have to be sold to pay the taxes. Congress has acted on this problem and is now seriously considering repealing the estate tax to ease the burden on business owners.
While it is still too soon to know what will happen with these tax proposals, you should monitor their progress. Whatever the outcome, many estate plans will need to be adapted for the new laws.
Contact your estate planning attorney and make sure your estate plan is updated accordingly.
Reference: Roll Call (April 9, 2015) “Obama’s Double Death Tax.”
Need an updated estate plan, contact us today to schedule a complimentary call.
Publish on: 04-Apr 22, 2015
