The broad-brush tax proposal released Wednesday by President Donald J. Trump repeated his campaign pledge to repeal the estate tax, but failed to provide financial advisers with any additional detail regarding its form.
That leaves advisers in estate-tax limbo, which they've largely been in ever since the prospect of a broad tax-reform package gained steam following November's presidential election.
The estate tax is a federal 40% tax levied on estates exceeding $5.49 million for individuals and roughly $11 million for married couples. Estates receive a step-up in tax basis at death, which dilutes the impact of paying capital-gains tax on inherited assets.
The federal tax raised $17.1 billion for the government in 2015. Many states also levy their own taxes, the asset thresholds and percentages of which vary.
A wealthy, elderly client of David Edwards, president of Heron Financial Group, passed away in January this year, and her estate is on the hook for a few millions dollars in tax. If the federal estate tax is repealed this year, that bill could disappear.
"I told them so far, 'Don't count on it,'" Mr. Edwards said.
Many observers expect an estate-tax repeal as part of any tax-reform package — which in and of itself isn't guaranteed, due to Democratic opposition and potential opposition from hardline conservatives who are loath to balloon the federal deficit.
Mr. Trump is, among other things, calling for a reduction in the corporate tax rate to 15%, a lowering of the top marginal income tax rate to 35%, and doing away with the alternative minimum tax.
An estate-tax repeal could take a variety of forms that would have different planning implications.
Observers note, though, that the estate tax would likely reappear in 10 years' time, even if it is repealed.
This is because Republicans would need several Democrats to support tax legislation in order to achieve a supermajority — 60 votes — and avoid a filibuster, something observers believe is unlikely due to philosophical disparity between both parties regarding taxes.
"The Democrats are dead set against it. It's dead on arrival as far as they're concerned," Mr. Edwards said.