“It has been said that Democracy is the worse form of government,
except for all other forms that have been tried from time to time.”
Winston Churchill, 1947
At this point, it doesn’t matter which candidate you supported for the White House – it’s a done deal. What’s important now is to understand there are certainly big changes affecting you and your business. It will also affect how you pass on accumulated wealth to your family. And it will affect beneficiaries that receive any inheritance from parents and/or grandparents.
President Elect-Biden made clear his plans to undo some of the tax regulations introduced by the Trump Administration. Most importantly, his plans will bring changes to the corporate tax rate, and also Estate and Gift taxes.
The golden age of estate planning is gone for a lot of people.
Biden plans to significantly lower the Federal Estate and Gift tax exemption, which is currently $11.5 Million per individual, or $23 Million per couple. Under Obama it was $5 Million. Biden proposes $3.5 Million.
However, even if $3.5 Million total, with properly planning it can be doubled to $7 Million. Marital Trusts and A/B Trust are great tools to integrate into planning structures to reduce the impact of estate taxes.
And what most individuals fail to understand is that life insurance increases your total gross estate when you pass away. Life insurance benefits can be taxed at 45% of the proceeds, depending on your estate. With proper planning, life insurance can be removed from your estate so that it is not taxable.
Above $7 Million in joint estates, there are other options,
Biden’s plan also suggests taxing dividend and capital gains income at the same rate as the ordinary income tax rate for any income above $1 million. He plans to increase corporate taxes from 21% to 28%, with a 15% minimum tax rate on company book earnings. A 21% corporate tax rate for foreign subsidiaries of US companies. And a 39.6% individual income tax rate beginning at $400,000.
Joe Biden’s proposed tax plan vows to collect an additional $4.0 Trillion (that with a capital ‘T’) in taxes by 2040. It will be designed so that 90% of this amount comes from high net worth individuals and businesses. The plan will most likely impact those individuals with capital gains or investments. Overall, the Democratic tax plan will significantly increase the tax on your wealth.
The smart, forward thinking individuals with more than $1 Million in total assets (including life insurance benefits) have always been interested in protecting their wealth. And now with the Biden changes, those with assets at, or above, $3 Million in total assets need to take additional steps, now more than ever, to protect assets for your family from increased estate taxes.
An International Trust – or Standby International Trust© - with integrated estate planning and asset protection is an excellent tool to protect your assets now, and in coming years for your heirs. Follow this link to learn more.
Asset protection has become a growing concern in the US not only for businesses, but for high net worth individuals. With the additional taxes on unrealized gains at death, asset protection becomes increasingly difficult for anticipated estate beneficiaries with the proposed escalation of Estate and Gift taxes.
Individuals with a taxable income greater than $400,000 should begin income tax planning with their accountants sooner, not later, before their income taxes swell.
Another benefit of asset protection integrated with estate planning is that it provides you an additional layer of wealth protection. Any assets under your name can easily be become victim to a lawsuit.
A well-structured International Trust – or Standby International Trust© - can protect you and your business. Apart from improved asset protection and security, the trusts can provide opportunities for foreign investment. Use it or lose it.
Careful planning should always allow for future flexibility. Allow for changes in your assets and investment objectives, changes in asset values - or changes in the assets themselves - and the challenges that occur during your lifetime.
If you are interested in learning more about international planning, start with these tips.
If you what to learn more, then How to Legally Protect Your Assets, 2nd edition, and Offshore Living & Investing, 2nd edition, are two great books to help you get started.
And if you would like to get serious about how you can protect your hard-earned assets, then contact me to discuss how you can proceed with a confidential initial review.
Until next time….
David
David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)
For more information visit www.DavidTanzer.com or email to Datlegal@aol.com. David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”
David A Tanzer & Assoc., PC.
Datlegal@aol.com
DAT@DavidTanzer.com
www.DavidTanzer.com
Vail, CO USA: Tel. (720) 293-2272
Auckland, New Zealand: Tel. (64) 9 353-1328
Brisbane, Australia: Tel. (61) 7 3319 6999
(Licensed to Practice Law in U.S. States & Federal Courts; Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; & Assoc. Member Queensland Law Society, AU - Foreign Lawyer)