Okay, welcome. We are on 9 of 10 for the Trump vs.
Harris tax battle. This one's pretty fun.
Like, I, I, this, it's pretty fun and pretty basic.
And maybe that's why it's fun, but the,
the death and the state tax,
just the differences in their opinions on that.
So I've talked about this past. I've talked about gifting.
I've talked about inheriting, talked about, I've talked about a state taxes.
Can you have a brief summary on that? And then kind of the current
proposals of how expect things, how expect things would end up depending on who
gets voted into office. Like a with the estate tax.
So remember, it was like 12.9 million dollars that before
it suggested for inflation, right now that you can die with without having to
pay estate taxes. It's kind of like the concept of estate taxes,
like when people people. Hear it for the first time, like how crazy it
is, like what can actually happen if you die with a certain amount of
net worth is pretty insane. But like the last,
the last few years, five, ten years, these estate tax limits have been pretty
high. So again, 12, if you die with about 13 million dollars of net.
Worth or less, you don't have to worry about estate taxes.
But here's, here's where it gets ugly. So if you're over the limit,
so say you died, it's a lot of net worth, but say you died
with 20 million dollars in net worth. We have an estate tax limit of
about 13. Thousand dollars. So you have an excess estate limit or
like you're over the exit or you're over this limit by 7,000,
7 million dollars. What happens with the estate tax is that
the government would want 40% of your net worth or 40% of.
That's 7 million dollars of net worth that's above the limit.
So, 7 million dollars, multiply that by 40%.
That's how much you know the government. So about a 3 million dollar tax
bill. But wait, here's, here's where it gets crazy.
That's. Even if you don't sell the asset,
you still need to pay the tax. So say you inherit,
if you just inherited land, which would be insane, or say you,
you died with land worth 20 million dollars,
your kids inherit the land, or say you just got one kid,
your one kid inherits the land worth 20 million dollars.
What do they have? They have a 20 million dollar asset,
it's land. Tax season rolls around,
CPAs are working with them, they go, oh, well by the way,
your father or parent or mother,
they were over this estate tax limit, UO,
3 million dollars of taxes.
And it's like, wait, but you didn't sell the farm or the,
you didn't sell the farm, you didn't sell the land. So we're going to
come up with the money to pay that. You'd have to pull on funds
from somewhere else. And a lot of times to do that,
you'd have to sell assets and those assets might be taxable,
like it's just, it can create a whole matter. But the last few years,
it hasn't been as important because this $13 million limit,
there's not a lot of people over the $13 million.
Like, comparatively in the whole population.
Umm, but ten years ago, that limit was like a million dollars.
So anyone with a net worth over a million dollars. And there's a lot
of people with a net worth in the United States with a net worth
of over a million. So it was, there was a ton of tax planning.
A ton of restructuring, putting funds into trust,
gifting things in your lifetime. Like, there was just a lot more activity when
that threshold was a million. But it wasn't.
Up to like five or six. And now it's at thirteen million.
Here's where I'm getting to the proposals. Under the Trump proposal,
um, we're expecting that it's going to stay the same.
Or pretend or stay the same or increase with inflation is what the expectation
is. Cause I, I believe that's, I'd have to go back and look to
see exactly when that was enacted. But I think it was part of that
2018. The Trump tax cuts.
Uh, we do know that,
uh, Democrats and Harris were expecting that they would want
to bring that down. Like. They would want that to phase out either phase
that phase out or just revert back to what it was before.
Which is about a five million dollar exemption.
Which is still a lot. But it's a lot less than the 13 million.
And it would just what it does. It would just open up a lot
more people that are. Subject to that estate tax.
And I use like the estate tax and death tax.
I kind of use that interchangeably. Um,
and then there's, there's even some states that have some inheritance and hair inheritance
death or state tax. Like that,
but those, that's really the main thing.
That I want to talk about with, with the estate tax limit.
So under Trump, we're expecting it's going to be about 13 million before inflation
under the Harris administration.
We'd expect it to go back down to the five.
And even a few years ago, they were trying to bring it back down
to about three. There's just kind of one.
One of those battles, Democrats versus Republicans bringing it down.
But the, the, the only people that win so the government could potentially get
more tax, but the accountants and the attorneys,
we get a lot more work because clients are scrambling because they don't want
to pay the estate tax and I don't want them to pay the estate.
The estate tax either, like it's, it's a pretty crazy tax,
but there are ways to restructure, get things into trusts,
get into like, there's certain types of life insurance trusts and holding
asset holding trusts where you can have your businesses transferred or family limited
partnerships. ships. It gets really complex and depending on your goals,
it may or may not make sense, but there is some opportunity for reducing
the tax impact. If you are over that limit, or if they do end
up bringing it down, just make sure you're tracking what the,
the lifetime limit is on the estate tax and just if you're over it.
Make sure you're doing some estate planning on it. Okay,
so this is, so this is the nine out of ten.
This is the ninth episode on the Trump vs Harris tax battle,
right? The next episode is going to be awesome.
I'm, I'm having a lot of fun starting to put it together.
But I have, I'll give you a little bit of like a teaser of
what it's about. So if you've heard,
I've, I've referenced them a little. We've got it on our website,
but I've got some tax personas,
like basically like a persona or a,
an avatar that I've created like. Specific type of people and
I'll, I'll, I'll come up with straight tax strategies and stuff for these kind
of different types of people, kind of like different categories of what type of
taxpayer you are. But in the next episode,
this last one, I'm going to talk about like specifically how these policies that
we've talked about and there's even been some to me. More that have come
out in the last couple weeks. I'll talk about how each of the specific
policies are going to impact that specific person.
Because honestly, that's, that's the biggest thing with all these different tax policies.
Like, the one, the last one I talked about was the real estate investors
and how Trump's policies can impact and benefit real estate.
investors. If you're not a real estate investor and you never want to be
a real estate investor, you probably don't care about that.
And so that's why I've got these other tax personas where there are personas
that will apply to you or just more closely aligned with what your goals
are and kind of like with your current situation. So that'll be,
that'll be the 10 out of 10. And this is the ninth episode of
the Trump vs Harris Tax Battle. Talk to you later.
there. Thanks, David. Thank you, Michael.
