Episode 4: Tax Changes to Look Out for in 2022

Published February 23, 2022 

Last year saw the emergence of several proposals under the Build Back Better Act that would impact U.S. taxpayers if signed into law. However, at this time, they have not come to fruition. According to Belinda Herzig, senior wealth strategist at BNY Mellon Wealth Management, other near-term developments could still lead to higher taxes. In this episode, Herzig covers expiring federal tax provisions, the prospect of higher gift and estate taxes, and using strategic borrowing to meet tax liabilities while still remaining invested. Join Ben McGloin, host of Your Active Wealth and head of advice, planning and fiduciary services at BNY Mellon Wealth Management, as he and Herzig discuss everything you need to know about taxes this year.

Below is a list of terms and acronyms discussed in this episode:

ESBT – Electing small business trust: A single trust for administrative purposes, such as having one taxpayer identification number and filing one tax return.

AFR – Applicable federal rates: The minimum interest rate that the IRS allows for private loans.

SLAT – Spousal lifetime access trust: An irrevocable trust where one spouse makes a gift into a trust to benefit the other spouse (and potentially other family members) while removing the assets from their combined estates.

GRAT – Grantor retained annuity trust: A financial instrument used in estate planning to minimize taxes on large financial gifts to family members.

IDGT – Intentionally defective grantor trust: An estate planning tool that is used to freeze certain assets of an individual for estate tax purposes, but not for income tax purposes.

CLAT – Charitable lead annuity trust: A charitable trust where a charity, donor advised fund or foundation of the grantor’s choosing received annual payments, either for a term or the grantor’s lifetime.

ICL – Investment credit line: A loan backed by assets in your portfolio, which can offer substantial loans at relatively lower rates.

ILIT – Irrevocable life insurance trust: A type of trust funded during your lifetime with one or more life insurance policies.

SALT deduction – State and local tax deduction: Allows taxpayers who itemize their deductions to reduce their taxable income by the amount of state and local taxes they paid that year, up to $10,000.

Subscribe to Your Active Wealth on your favorite podcast platform via Simplecast.

  • This material is provided for illustrative/educational purposes only. This material is not intended to constitute legal, tax, investment or financial advice. Effort has been made to ensure that the material presented herein is accurate at the time of publication. However, this material is not intended to be a full and exhaustive explanation of the law in any area or of all of the tax, investment or financial options available. The information discussed herein may not be applicable to or appropriate for every investor and should be used only after consultation with professionals who have reviewed your specific situation. The Bank of New York Mellon, DIFC Branch (the “Authorised Firm") is communicating these materials on behalf of The Bank of New York Mellon. The Bank of New York Mellon is a wholly owned subsidiary of The Bank of New York Mellon Corporation. This material is intended for Professional Clients only and no other person should act upon it. The Authorised Firm is regulated by the Dubai Financial Services Authority and is located at Dubai International Financial Centre, The Exchange Building 5 North, Level 6, Room 601, P.O. Box 506723, Dubai, UAE. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London Branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. The Bank of New York Mellon is incorporated with limited liability in the State of New York, USA. Head Office: 240 Greenwich Street, New York, NY, 10286, USA. In the U.K. a number of the services associated with BNY Mellon Wealth Management's Family Office Services– International are provided through The Bank of New York Mellon, London Branch, One Canada Square, London, E14 5AL. The London Branch is registered in England and Wales with FC No. 005522 and BR000818. Investment management services are offered through BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, One Canada Square, London E1C 5AL, which is registered in England No. 1118580 and is authorised and regulated by the Financial Conduct Authority. Offshore trust and administration services are through BNY Mellon Trust Company (Cayman) Ltd. This document is issued in the U.K. by The Bank of New York Mellon. In the United States the information provided within this document is for use by professional investors. This material is a financial promotion in the UK and EMEA. This material, and the statements contained herein, are not an offer or solicitation to buy or sell any products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such. BNY Mellon Fund Services (Ireland) Limited is regulated by the Central Bank of Ireland BNY Mellon Investment Servicing (International) Limited is regulated by the Central Bank of Ireland. BNY Mellon, National Association is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA") and the BMA does not accept responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. BNY Mellon is not licensed to conduct investment business by the Bermuda Monetary Authority (the “BMA") and the BMA does not accept any responsibility for the accuracy or correctness of any of the statements made or advice expressed herein. Trademarks and logos belong to their respective owners. BNY Mellon Wealth Management conducts business through various operating subsidiaries of The Bank of New York Mellon Corporation.