The American housing market is grappling with escalating interest rates and limited inventory, pricing many Americans out of home ownership. Massachusetts’s senior Senator Elizabeth Warren seeks to address this issue in the “American Housing and Economic Mobility Act.” Originally introduced during the 116th Congress but reintroduced earlier this week, the Act proposes injecting significant funds to create accessible housing units across the United States, aiming to increase the inventory and reducing upward pressure on prices.
Funding the American Housing and Economic Mobility Act and the Sunset of the Tax Cuts and Jobs Act of 2017
The proposed funding for this Act includes increased federal estate taxes. The Tax Cuts and Jobs Act of 2017 significantly raised the estate tax exemption to $13.61 million, but this provision is set to expire at the end of 2025, potentially reducing the exemption to $5.49 million per individual. Senator Warren’s bill proposes a more substantial change by lowering the estate tax exemption threshold to $3.5 million, a level not seen since 2009.
Political Landscape and Estate Planning Implications
While the American Housing and Economic Mobility Act faces challenges in a Republican-controlled House, the outcome of the November 2024 elections could shift the legislative dynamics. Should the Democratic Party gain unified control of the federal government, more families might find themselves needing to address complex estate planning issues sooner than anticipated. The prospect of lower estate tax exemptions could lead many families to reevaluate their financial strategies, affecting retirement plans, educational funding, and legacy goals. It is important for families and their advisors to explore advanced estate planning techniques, such as gifting, trusts, and strategic real estate transfers, to address potential financial impacts.
What Are the Next Steps?
In the face of these potential legislative changes, estate planners must proactively adjust to ensure their clients are well-prepared to protect their nest egg and intergenerational wealth.
