Channeling Donald Trump has become a national pastime, and for estate planners it is particularly tricky. 

President-elect Trump promised a repeal of the estate tax—the death tax, as he calls it—in exchange for tax on capital gains on a decedent’s assets in excess of $10 million. In its current form, the estate tax exempts a married couple for the first $10.9 million in their estates, and requires a 40% tax on the amount above that.

Trump’s stated design for the estate tax seems unambiguous: “No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes when you earned it.” But the mercurial Trump has humbled pundits, pollsters and prognosticators. (Remember: He promised to appoint a special prosecutor to investigate Hillary Clinton and “lock her up.”)

Some experts predict he also may eliminate the gift tax and the generation-skipping tax, both of which exist to keep wealthy individuals from avoiding income tax. Any of these measures would dramatically affect estate-planning strategies. His proposed wholesale restructuring of the income and corporate taxes further make for interesting times for estate planners, financial advisors and tax attorneys. 

To address the abrupt entrance of this elephant in the room, the University of Miami Law School’s Heckerling Institute on Estate Planning, convening in Orlando, Fla., Jan. 9-13 for its 51st annual conference, had to make some last-minute tweaks to its agenda after Trump’s unexpected victory. 

And while some are sounding alarm bells, John W. Porter, a senior partner at Baker Botts in Houston, reminds us “we’ve been here before”—in 2000, precisely, when a Republican Congress awaited the arrival of then President-elect George W. Bush. After he was sworn in, he and Congress promptly pushed through the 2001 tax act, which temporarily repealed the federal estate tax and the generation-skipping tax, and dramatically reduced the top income and capital gains tax rates.

That created some chaotic years for estate planners and tax attorneys, first when it was signed into law in 2001, and then again when the law was about to be retired in 2010.

But it must be noted that Bush was unable to make his tax cuts permanent because he did not have 60 filibuster-proof votes in the Senate. So he had to pass his tax plan in a budget reconciliation bill, which automatically stipulates the bill’s provisions are sunsetted 10 years after adoption. Trump also does not have 60 votes in the Senate, so unless he can bring some Democrats into his camp, any tax revisions will likely also sunset in 10 years.

Nonetheless, Republican leaders in Congress offered their consensus blueprint for comprehensive tax reform on June 24. The House GOP tax plan would eliminate the estate and generation-skipping transfer taxes. So, with Trump’s promises and a like-minded Congress, a repeal of the estate tax would appear highly likely.

Not so fast, says Ronald D. Aucutt, a partner and co-chair of The Private Wealth Services Group for McGuire Woods in Virginia. “I don’t expect the estate tax to be repealed next year, temporarily or permanently,” said Aucutt, who will join Porter on the Heckerling panel.  “They’re going to have to be careful on what they spend their political capital on.”

Dennis I. Belcher, who also represents high-net-worth clients at McGuire Woods, underscores Aucutt’s assessment: The estate tax, he explains, “affects one-half of 1% of people in the country—the very wealthy. Trump was not elected by that one-half of 1%.”
Both Belcher and Aucutt predict major tax changes, but say Trump would likely be wiser to spend his political capital on a reduction of the corporate tax and the repatriation of overseas funds by U.S. companies at a discounted rate. In short: Jobs for his working-class base will likely win out over catering to the super-wealthy—at least initially.

That said, both men agree, large-scale estate planning will likely be put on hold until this all plays out.

“Clients don’t want to hear guesses; they want advice,” says Aucutt. “So what I’m telling clients is the estate tax probably won’t be [repealed], but they should plan as if it will be, and no significant transfers should be made for now.

“Logic would say the estate and gift tax will likely not be repealed,” Belcher adds. “But logic has gone out the window.”