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Fearing Biden tax hikes, wealthy Americans rush to change estate plans

EconomyOct 09, 2020 05:20PM ET
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© Reuters. U.S. Democratic presidential candidate Joe Biden campaigns in Phoenix, Arizona

By Suzanne Barlyn

(Reuters) - Wealthy Americans are scrambling to change their estate plans before year-end, worried that Democrat Joe Biden will win the U.S. presidential election and raise taxes, say financial advisers to the moneyed set.

The biggest concern is that the White House and Congress could get swept up in a "Blue Wave" of Democratic wins that give Biden the power to propose and pass a sweeping set of tax reforms.

Wealthy people are especially nervous that an exemption allowing individuals to leave up to $11.58 million to heirs, free of estate or gift taxes, could be cut before it expires in 2025.

Democrats want to raise estate taxes to the "historical norm," according to the party's platform. That could mean slashing the exemption to $5.49 million, the figure in place before Republican President Donald Trump signed a sweeping tax bill that included benefits for corporations and wealthy Americans in 2017, advisers said.

It is unclear how the election will go or what, if any, tax reform will pass. Tax code changes can also be complex and time consuming. But as Biden has climbed in the polls, rich people are rushing to set up trusts and revise existing ones before year-end to avoid 2021 tax consequences, advisers said.

"The $11.58 million question is, 'What is going to happen to the gift and estate tax exclusion?'" said Toni Ann Kruse, a New York estates lawyer who counsels ultra-high net worth people. "We don't know who will win the election or control the House or Senate - and all of those factors will play into what could happen."

Biden would also "return the estate tax to 2009 levels" to fund paid family and medical leave, according to his website.

His plan also includes raising taxes on long-term capital gains, which is the profit earned by selling assets whose values have appreciated. Taxpayers with income above $1 million would pay a 39.6% income tax on the profit, instead of the current tiered approach that maxes out at 20% for individuals with $441,450 or more income.

In a statement, Biden campaign spokesman Andrew Bates reiterated the candidate's intent to change tax law in ways that benefit less affluent people.

"Joe Biden is running to rebuild the backbone of this nation - the American middle class - by ensuring that our economy rewards work and not just wealth," he said.

The uptick in requests for estate changes intensified in June when Biden pulled ahead of Trump in polling, advisers said. Several firms said they have been overwhelmed by requests since then, and expect business to pick up more toward the end of the year.

Tax-related workflow is triple the norm at Miller Samuel Inc, a New York-based real estate appraisal firm, said Chief Executive Jonathan Miller.

"We are flooded with requests for gift and estate tax appraisals right now," he said.

New York estate and tax planning lawyer Philip Michaels has added around 15 high net worth clients during the last several months who are revising estate plans.

Rockefeller Capital Management, a financial advisory firm in New York, is holding virtual events for customers while working with legal and tax advisers to sort through nuances of possible legislation, said Joe Roberts, Senior Wealth Strategist.

Clients are worried about a "quick turn and drastic departure" from the status quo, Roberts said.

At the same time, some customers are worried about making decisions too early. That is because trusts created to use lifetime exemptions are not easily unwound.

"It's a lot of money to give away," Indianapolis estate planning lawyer John Olivieri said of some of his clients. "People are struggling with, 'Do I really want to give this away?'"

Fearing Biden tax hikes, wealthy Americans rush to change estate plans
 

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Comments (10)
Thom Miller
Thom Miller Oct 09, 2020 10:10PM ET
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Well, with a value of 15,400 shekels, at least Eddie and his family won’t have to make any changes to their estate plans. Besides, Eddie is on record as saying if Biden wins, he and his entire family are moving to Tel Aviv. Shalom!
Marco cuevas
Marco cuevas Oct 09, 2020 5:58PM ET
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It's about time Corporate America pays their fair share especially in this pandemic as they just get richer selling masks, sanitizer, and other things related to Covid.  GET EM BIDEN.
Bill Hoerter
Bill Hoerter Oct 09, 2020 5:58PM ET
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You will never learn.. The more dems say they want "fair share:" the harder people with assets will protect rather than invest. Lower investment means fewer jobs. Wake up!
Mitch Haines
Mitch Haines Oct 09, 2020 5:58PM ET
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They just don't get it!!
Christopher Dunson
Christopher Dunson Oct 09, 2020 5:43PM ET
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Fear Biden....that's all you need to know
Bill Melton
Bill Melton Oct 09, 2020 2:13PM ET
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Biden/Harris just go with the wind, constantly waffling on issues such as tax hikes, green new deal, fracking, etc.  All of their policies on their website but they trust most independents wont go read them.  Its like the fine disclosure at the bottom of the agreement and the public debates, speeches, etc are all about free stuff(sales pitch). The sad reality is they are right. people just hear what they want to hear and always find out later the catch but by then its too late.  Its like the ignorant fools that finance a car for 8 years because the payment is so low.  They never think about it being all interest at the beginning of the loan.  Its usually the young people that fall for that just like they do the Democrat party.  Pretty soon auto loans will be for 15 years  LOL
Bill Hoerter
Bill Hoerter Oct 09, 2020 1:39PM ET
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New Yorkers also getting out for the suburbs or Florida. If government could get crime under control, the homeless off the streets and the subway not to smell so bad I still won't move back.
Thom Miller
Thom Miller Oct 09, 2020 1:39PM ET
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Florida, Bill? Really? That says it all about you. Florida....the armpit of the nation.
Jan Buyle
Jan Buyle Oct 09, 2020 12:40PM ET
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Yeah... the free ride for the ultra-wealthy will be over... they will have to pay their fair share of taxes... about time!
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Kevin Baker
Kevin Baker Oct 09, 2020 12:40PM ET
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Wake up! First, the ultra-wealthy have most of their money in assets, not liquid cash, so they won't be greatly affected by higher taxes. Secondly, what do you consider "their fair share?" Even if the US had a flat tax rate, the wealthy would pay more in taxes because 10% of 1 million is more than 10% of $1000 for example. So the wealthy have always paid more on their income taxes. And don't fool yourself, who do you think politicians are (little hint - criminals). Most become multi millionaires after getting elected. This, as you should know, is from bribes with those same big corporations and wealthy people you despise. You need to get a clue. The Democrats have always used the talking point of "the rich are bad and we'll raise taxes on them, etc" to get votes from those who aren't rich. But you should know by now that the middle class is always hit hardest by the increase, and the wealth gap keeps widening. I could go on, but just stop being a follower and learn.
Grant Gilligan
Grant Gilligan Oct 09, 2020 12:40PM ET
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Genius! Let all the broke and ignorant provide all the jobs!
Jeff Chevalier
Jeff Chevalier Oct 09, 2020 12:40PM ET
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BS. Remember Trump saying that if you wanted him to pay more than $750, change the laws. The laws are made by the rich and they are always in their favor.
Jan Buyle
Jan Buyle Oct 09, 2020 12:40PM ET
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Genius! Trickle down has NEVER worked in history... it's invented to make the wealthy more wealthy. point final. And you believe them and pay your taxes...
Jan Buyle
Jan Buyle Oct 09, 2020 12:40PM ET
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Rick, like Trump paying $750?
Kaveh Sun
Kaveh Sun Oct 09, 2020 10:50AM ET
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I earn a few k investing, under his plan nearly half goes to tax. Tax the rich my rear.
ross Parent
ross Parent Oct 09, 2020 10:50AM ET
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only if you're making 1m per year, otherwise nothing changes for people
Fah QQQ
Fah QQQ Oct 09, 2020 10:50AM ET
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Ever heard of capital gains tax?
Bill Riley
Bill Riley Oct 09, 2020 9:36AM ET
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People are leaving California in record numbers the last 30 days, the are going to Arizona, Texas, Florida and Idaho.
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Karl Blumenhorst
Karl Blumenhorst Oct 09, 2020 9:36AM ET
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Kalifornia's Socialist ideals are wonderful, until reality shows their weakness.  No system is prefect, but socialism is fundamentally flawed because too much of their ideas are based on ideology, not logical facts.   Ex:  - let's stop prescribed burning because fires destroys too many wildlife.  - let's fund green energy, only to find out that high cost does not allow quality energy sources.  - let's fund illegal aliens because we want to be fair, only to find that the funding does not return an equal amount of social and economic benefit.
skriller bee
skriller bee Oct 09, 2020 9:36AM ET
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can you pls put out a statustical data on that and not just feelings
perplexed76 .
perplexed76 . Oct 09, 2020 9:36AM ET
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Karl Blumenhorst  what did ypu discribe? it's not socialism at any word.
Mse II
Mse II Oct 09, 2020 9:36AM ET
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the worst part is they can't comprehend how there decisions/ votes allowed Cali to become the toilet of America. So they will take their liberal beliefs to their new home and try to do the same things there. It's like a drug dealer moving into a good neighborhood to avoid low lifes
Fah QQQ
Fah QQQ Oct 09, 2020 9:36AM ET
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40 percent of incoming residents into AZ are from CA. Fact. Turning the state purple. Fact.
perplexed76 .
perplexed76 . Oct 09, 2020 8:54AM ET
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trump reduced taxes, the budget suffers, monster companies buy their own stocks, their tops buy luxury  real estate. Great maga plan!
Ernie Keebler
Ernie Keebler Oct 09, 2020 8:37AM ET
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Big corporations and the wealthy avoided paying taxes on most of their income which was expanded in 2017 and now don't pay taxes when passing it on to heirs even more expanded under trump while the average working stiff pays dearly. This is not the historic status quo, it is an excellerating trend of the biggest money concentration in history
Zack Harding
Zack Harding Oct 09, 2020 8:37AM ET
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Stop lying. You speak of Kamala’s talking points with zero substance. Why hasnt Biden and company gotten it changed in 40+years?Now you blame Trump.Wow.
Jeff Chevalier
Jeff Chevalier Oct 09, 2020 8:37AM ET
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He blames trump now because trump did it now!
 
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