On January 20, 2015, President Obama gave his annual State of the Union Address to members of Congress and to the American people. This year, one of the central points in President Obama’s speech was the concept of “middle class economics.” According to the President, middle class economics is “…the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”
This Means Closing Some Tax Loopholes
In order to pay for some of the president’s initiatives, Mr. Obama wants to close capital gains-related loopholes in the inheritance tax and suggests that capital gains taxes be imposed on transfer of assets at death. More specifically, the Obama administration is proposing that the following property be exempt from capital gains when transferred at death:
- The first $200,000 in capital gains (per couple).
- A home worth $500,000 or less (per couple).
- Personal property that is not valuable art or collectibles.
There would also be special rules for small family businesses. But according to the proposal, everything else should be subject to capital gains tax as if it had been sold.
The Obama administration contends that about 99% of this capital gains tax burden would be paid by the wealthiest 1% of households in our nation.
None of This Is Law Yet
The proposals outlined by the president during his State of the Union Address are not yet law, but it’s important that you stay up to date on the decisions made about them. Consult your estate planning lawyer if you have questions about how any changes could apply to your estate plan.