Marine Business Owners: $11.5MM Estate Tax Exemption is at Risk


Potential pending changes to the estate tax starting Jan 1, 2021 could significantly impact net worth. While the window is closing there is still time for DLS Marine and The McLean Group to provide you with a business or estate valuation to lock in current exemptions and tax rates.  
As we enter the second half of 2020, now is the time to have a business valuation performed as part of the estate planning process to take advantage of the currently favorable estate tax exemption.
The IRS requires valuations of privately held business interests to support values claimed on estate or gift tax returns. A valuation of a minority interest in an LLC or other entity that holds estates or marketable securities may be necessary as well.
Although the current estate tax exemption is set to run through 2025 under the 2017 Tax Cuts and Jobs Act, there is uncertainty if this exemption will remain in place. With the upcoming presidential election just months away, lawmakers are under enormous pressure to increase revenue to address the economic impact of COVID-19, to include decreases in tax revenue and significant spending through the CARES Act and other programs to prop up the economy during this unprecedented period.

As lawmakers look to increase revenue, the estate tax will be an easy target as current exemption levels are the most favorable on record – $11.58M for an individual, or $23.16M for a married couple. The top estate tax rate is also at a near historical low of 40 percent. Consider how this compares to that of 1976 when an estate was taxed at 77 percent for the assets above $60,000 or in 2000 at 55 percent for the assets above $675,000. There is a high probability 2021 will see higher tax rates and lower thresholds for taxable estates. The window is closing for business owners to protect themselves by moving assets into a revocable trust where current estate tax thresholds will be grandfathered in.

With over 70 years of combined company history and dedicated practices in marine asset survey, appraisal services and business valuations, DLS Marine and The McLean Group are perfectly positioned to help marine business owners navigate issues related to business and asset valuation. Please contact DLS President Harry Ward at 757-613-0476 to discuss how we can best support your objectives.