Divided Government Should Prove Favorable

McNees Wallace & Nurick LLC
Contact

McNees Wallace & Nurick LLC

Unless there are successful challenges by President Trump in several states with respect to vote counts, it appears that Joe Biden has won the 2020 presidential election. The Republican Party picked up seats in the House of Representatives but did not gain majority control. The Senate currently has 50 Republican Senators. Control of the Senate therefore comes down to Georgia and its runoff elections. The Republican party needs to win one of these seats to control the Senate since the Vice-President breaks ties in the Senate.

For clients, gridlock resulting from a divided government for the next two years should prove favorable (or at least provide some certainty that the tax laws will not change). However, we still believe that clients should, in the appropriate circumstances, continue with planning for the following reasons:

  • Any planning that you are considering now will benefit your family and avoid estate tax and inheritance tax over the long term. Potential changes in the tax laws should not affect your decision making – your estate plan documents can incorporate flexibility to address future uncertainties.
  • The 2022 mid-term election may shift control of the Senate to the Democratic party. There are 22 Republican seats up for re-election and 12 Democrat seats up for re-election. A shift in control of the Senate (and assuming the House control does not change) likely would result in the enactment of some version of the Biden tax plan, which calls for a lowering of the estate and gift tax exemption from current highs.
  • The “sunset” of the current tax laws is still scheduled for December 31, 2025. It is difficult to predict what will happen this far in the future given the two election cycles between now and then. Also, the CARES Act stimulus and other anticipated pandemic stimulus could result in some form of a tax increase in the near future to address the national debt.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Written by:

McNees Wallace & Nurick LLC
Contact
more
less

McNees Wallace & Nurick LLC on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.