No matter if you turn on the TV, switch stations on the radio or even pick up the daily news, one thing is clear – we are in an election year. As of now, the front-runner of the Democratic Party is Hillary Clinton. Setting our political opinions aside for a moment, what estate tax implications would a Hillary Presidency have?
- Estate Taxes: As of 2016 the United States has an estate tax. That tax is forty percent on every dollar that an individual has over $5.45 million, or almost $11 million for a couple. Most average Americans will not have to pay tax simply based on the size of their estate. However, a Hillary Presidency could impact those limits. A Clinton administration carries with it the potential for a lower exemption amount (or the amount a person can have before they pay estate taxes). Hillary has been part of legislation for lower thresholds of $3.5 million dollars as well as a higher tax rate of forty-five percent. In other words, more people would be paying more tax.
- Investment Strategies: One of the Clinton campaign’s income sources is from life insurance companies. Traditionally, people make contributions to campaigns based on their own interests. In this case, life insurance has long stood as a tool which passes a tax free benefit onto a person’s beneficiaries. With a lower estate tax threshold as well as a higher percentage that would need to be paid, a Clinton Administration could turn out to be a windfall for insurance companies. With more and more investors trying to structure their estates to avoid taxes, the life insurance companies’ motivations become clear.
Although current tax laws do not result in most Ohioans facing a large liability, understanding the proposed tax plan for each candidate is important. If you have questions regarding how to safeguard your estate plan from taxes, please feel free to contact AlerStallings. We would love to take the time to discuss it with you.