End of Year 2021 Tax Legislation Update – The Eagle Has Not Landed (But The Geese Have)
By: Stephen R. Elville – Managing Principal and Lead Attorney – Elville and Associates, P.C.
Here on the east coast when a hurricane or tropical storm is first identified in the Caribbean Sea or Gulf of Mexico, what do we do? If you are like my wife, you know about this immediately because like her, you’re on top of the weather situation at all times, you read about weather daily (if not more frequently), and you even watch the Weather Channel as you (and they) ask the obvious but unspoken question: is this the big one that’s going to develop into a large storm, track up the coast or possibly an inland route, and have a tremendous effect on me, barreling straight into Maryland causing massive flooding, power outages, lines at grocery stores, property damage, or worse? Or, if you are like me, you often hear about weather through osmosis as you go through your busy daily routine, and you ask the same unconscious question about the potential for a looming disaster. But you tell yourself – it won’t happen; it never does; the experts are very often wrong; that you’ve been through these false alarms before and they’re all such a waste of time, energy, and resources; and that it’s best to just act as if it won’t happen (like many of the Maryland snow predictions), and you go about your business as usual until it becomes painfully obvious that the thing is, as we used to say in the seventies, “for real.” So which approach is better? It may be hard to say because there are so many variables. But two things are clear in this sea of clouds: (1) there is great uncertainty in predicting the weather; and (2) no matter what philosophy or approach you subscribe to, you may end up being right or wrong depending on actual events that are completely beyond your control. Well dear reader, your correspondent here and Elville and Associates, along with the entire estate planning and tax planning community across the country of which we are a part, have done our best to keep you informed over the past twelve months about the tax legislation winds of change on Capitol Hill. Beginning with Senator Sanders’ For The 99.5% Act, to Senator Van Hollen’s Step Act, to President Biden’s American Families Plan, through the doldrums of the summer of 2021, to the seemingly definitive September 2021 House Ways and Means Committee draft legislation, through the maelstrom of October and Senator Wyden’s out-of-the-box ideas, and then beyond the surprising election results of early November and the resulting stasis, it now appears that the Fall 2021 political hurricane season has produced nothing more than cooler temperatures and no real direction about new tax legislation to speak of, with nearly all of the major proposals, conjecture, negotiations, and impending changes on ice.
So what do you do if you were ahead of the curve, dedicated and in touch with all of the information available to you these many months, a good and faithful student and steward of your estate, tax, and financial planning, now that the impending legislative storm has not (yet) happened by near end of calendar year 2021? In short, you congratulate yourself. And if you were not only ready and informed, but you took proactive steps to implement appropriate planning strategies based on your particular needs, then I encourage you to accept that you did the right thing based on the information you had available to you and the relative risk of not acting. Why? Because is there any reasonable doubt that significant changes are going to eventually come (even though they have not (so far) come as predicted by end of this year)? For example, the current federal estate tax, gift tax, and generation skipping transfer tax exemption amount is $11.7 million per person. But this huge (temporary) exemption amount is slated to be reduced by law (unless changed by congressional action) to $5 million per person, adjusted for inflation, by January 1, 2026. If and when this happens, is it not reasonably predictable that in the next legislative session to follow, that Maryland will also lower its current $5 million per person state estate tax exemption? And with the huge deficits caused by the COVID-19 disaster and all the serious talk (and eye-popping proposals) about eliminating the cost basis adjustment at death, limiting the use of grantor trusts, and much more, and the relatively recent passage of the SECURE Act that accelerates income taxation of retirement plan assets for the vast majority of Americans, is there any reasonable doubt that the federal government is looking for ways to significantly increase revenue? So dear reader, have no doubt about what you did to be proactive, and know that all of your work to board up your estate, tax, and financial planning windows, buy emergency water and supplies in the form of studious and careful consideration of the political shifts brought about by the new Biden Administration since January 2021, and build a wall of planning sandbags around your estate, was the right thing to do for you. Do not be discouraged and know that the political weather developments are not over but remain ever-changing on the radar.
For those of you who ignored most of the political tropical depression of 2021 either because you are numb to politics (and who can blame you); or you generally do not believe that this Congress can get things done; or you just don’t react to political storm predictions until they become perfect storms or the path of the storm is one that will be a direct hit, then as your correspondent I say the following: the most you may be able to do now is watch for political black ice and make sure that you salt your porches, decks, walkways, and driveway to keep yourself and others from slipping during this political deep freeze by (a) continuing to stay abreast of potential changes in the laws; (b) keeping in touch with your financial and tax advisors; (c) remaining consistent in your estate planning annual or bi-annual updates; and (d) if you are not a Member of Elville and Associates’ Client Care Program (CCP), be sure to join so that you are committing in a partnership-type relationship to a predictable and repetitious review of your estate plan, continuing client legal education for you and your family members and fiduciaries, and social connection with other like-minded persons who, like you, are committed to excellence in their legacy planning.
In closing, I welcome you to our Fall 2021 Edition of the Elville Benefactor, and I encourage you, whether you are a current or past client of Elville and Associates, a professional advisor or referral partner of our law firm, or a prospective client who is interested in establishing a new relationship with a progressive estate, elder law, and special needs planning firm, to always remember that client and family (and advisor) continuing education is the key to planning success by and through an intentional process. Whether you were proactive in 2021 concerning the never-ending tax legislation discussion or not, the fundamentals of estate planning never change – individuals and couples need to plan for incapacity; appoint financial and health care agents; make health care decisions and understand health care decision making policy; plan for death by providing for spouses, minor children, grandchildren, nieces and nephews, and others; appoint guardians for minor children and persons with disabilities; protect assets for at-risk beneficiaries; address tax ramifications; satisfy charitable or other specific goals; facilitate wealth transfer; address long-term care issues; and more. Don’t be discouraged or dissuaded by the ever-changing political forecast. And regardless of whether you are like my wife, and always at the forefront of news and weather events, or like many of us who keep an umbrella in the car just in case it rains, Elville and Associates is here for you to engage with you in a process-driven partnership-type relationship to address, in the highest and best ways possible, the atmospheric changes and developing currents in our world, be they political, social, economic, or health-related, in coordination with your planning team of advisors.
Wishing you a wonderful Thanksgiving and holiday season,
Stephen R. Elville, J.D., LL.M.
President and CEO of Elville and Associates, P.C.
Stephen R. Elville, Managing Principal and Lead Attorney of Elville and Associates, works with individuals and families to provide a unique attorney-client experience through a proactive and collaborative approach to planning. As a member of the National Academy of Elder Law Attorneys, the Academy of Special Needs Planners, and the National Network of Estate Planning Attorneys, he works to bring peace of mind to clients by creating solutions to their needs through counseling, client education and the use of leading-edge legal-technical knowledge.
Mr. Elville brings a unique, personalized approach to planning and has extensive experience in working with clients involved in crisis situations and pre-crisis matters.
He is a seasoned speaker and each year presents at many webinars, workshops for businesses and their employees, conferences, and continuing education events.
He was named to the Maryland Super Lawyers list for a sixth time in 2021, and also had a feature story written about him in the national Super Lawyers Magazine about the Elville Center for the Creative Arts, the firm’s charitable organization he founded in 2014.
Mr. Elville routinely handles client matters in elder law, estate planning, special needs planning, tax planning, guardianship, asset protection, estate and trust administration, fiduciary representation, and more. Mr. Elville may be reached at firstname.lastname@example.org, or 443-393-7696 x108.