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How a new administration could change estate planning

With a new administration poised to enter the White House and potentially recommend big changes to some tax laws, some New York residents might be wondering whether they should postpone creating an estate plan. However, this assumes that whatever new laws are put in place will still be there at the time of a person's death. In four or eight years, or even longer, those laws could be changed again. Therefore, a better approach is to create a plan that is flexible enough to encompass both current and future tax laws.

Under the incoming Trump administration, the estate tax might be abolished altogether. While only a small percentage of people have to pay federal estate tax, its repeal could influence how capital gains tax is levied, and this might affect a larger number of people.

A change in capital gains tax could create a problem for some heirs. For example, there could be a deemed transfer at death that would result in a capital gains tax regardless of whether or not the property is sold. This might mean that the cash flow is not available to pay the tax, and this could result in a family having difficult retaining property or wealth.

Whether or not there is a change in estate tax laws, people should still review their estate plan regularly. A person's assets and their family are likely to change over the course of a lifetime or even a few years. These changes might include purchasing property, births or divorces among many others. People who remarry should make changes to ensure that both their current spouse and children from any previous relationships are included in their will, beneficiary designations and other estate planning documents.

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