The Votes Are In
The 2022 General Election is completed, and while some votes took longer to tally than others, the results have already signified that changes will be coming to various states. The results of the Congressional races and specific ballot measures in California could create issues with your estate plan. Keep reading about how these results may impact your estate, and learn more in our webinar.
Control of Congress and the Estate Tax
While the Senate remained under Democratic control, the House gained more Republican seats and flipped to the other side. While the obvious implication is two years of political gridlock in the House and Senate, it also has implications for certain tax laws.
The current estate tax is 40 percent at the federal level, which is quite hefty; however, a person can pass along $12.06 million each without incurring any tax (in what is known as an exemption). In 2023, this exemption will increase to $12.92 million. In 2026, however, that exemption will be cut in half to $6.8 million dollars.
What does this potential gridlock in Congress mean for the estate tax? It likely means that unless the Republicans control all three branches of government after the 2024 election, there will be no change, and families should begin planning for a massive drop in the estate tax exemption.
California Prop 30
On the California state ballot, Prop 30 put forth an increase of 1.75 percent on taxes for individuals making over $2 million per year; that money would go to support an electric vehicle network. This ballot was shot down by voters, which indicates Californians may be growing tired of continually increasing taxes at the state level. They also may be concerned about businesses and wealthy individuals leaving the state, which could imply higher taxes on individuals.
While this might seem that new taxes will not be put forth anymore, it is doubtful that such a lack of new taxes will be the case. California may likely put forth an inheritance tax or something similar, but these are merely rumblings and have no solid ground.
California Prop 19
What was not on the ballot, however, was any effort to combat Prop 19. Because of that, Prop 19 is still in place in the state; anyone who owns a home or rental property and passes on that property to their children will also be passing down a massive increase in property taxes.
Get In Touch with California Estate Planning Attorneys
This information might sound frightening, but it should motivate you to create an estate plan to protect your family’s future. The attorneys at GIlfix & La Poll Associates LLP are dedicated to helping families create estate plans that meet their unique needs. We can help you protect your estate for generations to come.
Learn more about how we can help with estate planning or schedule a consultation by calling (650) 683-9200 or visiting our website.