Estate planners for the wealthiest Americans are combing through the Biden administration’s proposed tax increases, hunting for ways to sidestep the potential hit from higher taxes on investment income and new capital-gains taxes at death.
The result, so far, is early strategizing about making gifts this year before some changes would take effect. That approach is mixed with acceptance that Congress will pass some significant tax increases and tempered by hope that it won’t.
“Our clients are resigned to the fact that taxes will go up,” said Helena Jonassen, a partner at Evercore Inc.’s wealth management unit.
President Biden has proposed raising the top capital-gains tax rate to 43.4% from 23.8% and taxing appreciated assets at death as if they had been sold. Under current law, appreciated assets held until death escape the income tax. Heirs pay capital-gains taxes only when they sell and only on gains since the prior owner’s death.
Tax lawyers are looking at two basic approaches—act now or wait it out.