Currently if you were to buy a stock valued at a $1 and the stock grew to $100 at the time of your death all the capital gain realized during your lifetime would evaporate and not be taxed if your heirs sold the stock after your death. The current proposal by President Obama would require that the tax basis of a capital gain would essentially be carried over to the heirs. What this means is that the heirs would have to pay a much higher capital gains tax on inherited items. However, the president’s proposal would have certain exemptions such as couples or family-owned businesses.
Estate Planning Attorney Salt Lake City
A change in the basis adjustment rules will not just affect the wealthy but will have a major impact on many middle class families. The major takeaway from the President’s proposal is that laws affecting your estate plan are fluid and can change at any time. The president’s proposal is a prime example of why once you have an estate plan that it is essential to perform reviews with your estate planning attorney on a regular basis. You never know when your plan will no longer be effective.