Estate planning and the changes to capital-gains taxes

On Behalf of | May 5, 2021 | Estate Planning |

Having an estate pan in place is not just for the wealthy; however, certain strategies and information may be more beneficial for those that are financially well off in Michigan and elsewhere. The Estate planning process is not an easy one to begin, but when an individual or family are provided all necessary information, including any current or potential legal changes, one can draft a beneficial and successful estate plan.

Changes to capital-gains taxes

Based on the Biden Administration’s American Families Plan, the capital-gains taxes will rise, which means the end of a rule that has aided wealthy Americans with their estate planning for generations. These changes would increase the top capital-gains rate from 23.8% to 43.4%. Additionally, it would tax these assets as if they were sold when an individual passes.

In other words, a benefit the slightly less wealthy multimillionaires would no longer be spared when it comes to estate tax. He or she would not face capital-gains taxes at their death.


Whether it is new policy or not, there are always exceptions to the rules. In this case, the plan is likely to encounter many changes as it moves through Congress. For example, there is a concern regarding family-owned farms, and an exemption for them is being sought.

Currently, more than two-thirds of all families in the U.S. have some unrealized capital gains; however, most of these families are covered by the $1 million exemption. Families falling in the top 10% with a median net worth of $2.6 million have around $519,000 in unrealized capital gains.

An estate plan is an essential life planning tool; however, it is one that can alter throughout one’s life. With each life event, and individual should update their estate plan. Whether it is marriage, divorce, children, inheritances or an increase in income, it is important that an estate plan resembles what one owns and the wishes they have for it. Additionally, changes and modifications may be necessary to ensure one’s wealth is protected.


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