Many Pennsylvania residents are paying close attention to this year’s general election, including watching the presidential debates. Some voters are concerned about proposals made by Democratic candidate Hillary Clinton to change existing estate tax rules. If those changes were to come to fruition, some of the nation’s wealthiest families would face a significant estate tax hike.
Currently, estates that are worth up to $5.45 million are exempt from estate taxes. Any wealth accumulated beyond that point is subject to a tax of 40 percent. Secretary of State Hillary Clinton has proposed reducing the exemption amount to $3.5 million and increasing the tax rate to between 50 and 65 percent. Only those with an estate valued at more than $500 million would be subject to the highest rate.
Of course, it should also be noted that families who have amassed significant levels of wealth are usually able to obtain excellent estate planning services. That can help them reduce the portion of their estate that is subject to taxation, and in some cases, eliminate estate tax consequences entirely. However, many are concerned that families who have done very well but are not exceedingly rich will be especially hard hit by these changes.
It is also important to understand that the proposals and promises made during political campaigns do not always result in actual change. It is possible that even if Clinton is elected this November, the estate tax could remain at its current level. With campaign efforts now in full swing, Pennsylvania residents will no doubt hear more about each candidate’s approach toward estate tax and other estate planning matters.
Source: Forbes, “Hillary Clinton Vows 65% Estate Tax To Donald Trump’s Repeal“, Robert W. Wood, Sept. 23, 2016