President Joe Biden's recent unveiling of his budget proposal, titled "General Explanations of the Administration's Fiscal Year 2025 Revenue Proposals," could significantly reduce the wealth your heirs will get. 

How Can Joe Biden's 2025 Budget Proposal Reduce the Wealth Given to Heirs?

According to Forbes, even if a fraction of this proposal is enacted, it could result in significant alterations to the taxation of the wealthiest Americans and could diminish the amount of wealth that can be passed down to future generations. 

During his recent State of the Union address, Joe Biden vowed to increase the taxes of big corporations and wealthy Americans.

Forbes reported that while the outcome of congressional negotiations remains uncertain, many of the provisions in Biden's proposal that could profoundly impact wealth distribution and tax planning strategies are becoming effective after December 31. 

The proposed tax changes could reportedly limit many common wealth transfer strategies, making it imperative for individuals seeking to preserve and transfer wealth to plan accordingly. 

For example, Biden's proposal would now tax a transfer property by gift or death, but there would be a $5 million exclusion from this gain, so it would only affect wealthier taxpayers. 

Under the new proposal, Forbes reported that contributions or gifts to and distributions from any irrevocable trust would also be deemed income tax recognition events, and the overall tax burden for wealthy individuals on death could also be dramatically increased.

Forbes warned that the proposal could result in a bigger taxable estate than under the current law. An individual would also be allowed to only give away $18,000 to as many people each year, or you could gift $360,000 yearly if you have 20 heirs. Based on this annual exclusion, you and your spouse can also gift up to $720,000.

How the Upcoming US Elections Could Affect Taxation Policies

According to Forbes, depending on the results, there could be vastly different approaches to taxation policies. Should President Donald Trump secure a second term and control both the House and Senate, there may be efforts to extend tax breaks for the wealthy and repeal the estate tax. 

However, if Joe Biden secures a second term and gains control of Congress, he may push for the implementation of the proposed tax changes to address wealth inequality and fund social programs.

READ NEXT: Joe Biden Keeps Donald Trump's China Tariffs Despite Clashing on Many Policy Issues: Here's Why 

Wait and See? 

Forbes emphasized the importance of planning amid this uncertainty, urging individuals to consider creating a grantor, establishing trusts, and making gifts to them before the year ends. The outlet also noted that preserving reasonable access to trust assets is vital if you transfer massive wealth to one or more trusts. 

Instead of just setting up a trust for your descendants, Forbes recommends naming your spouse a beneficiary as well, which may still facilitate your achieving estate tax planning and asset protection goals while retaining more access. However, the outlet also advised against taking proactive steps that might later be regretted if the estate tax is repealed.

It also suggested carefully weighing in on whether you should do anything if you are uncomfortable transferring significant wealth to irrevocable trusts and would only consider doing it if the Biden tax proposals are enacted.

READ MORE: James Biden, Joe Biden's Brother, Contradicts Himself at Impeachment Hearing on President's Involvement in Family Business: GOP