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Looks like federal taxes may be rising. Are you prepared?

Over the last few years, Democratic leadership has been calling for increased federal taxes on corporations and wealthy individuals. Now that they have the White House and majorities in the House and Senate, their tax increases are more likely to pass.

According to the New York Times, congressional Democrats and the President don’t necessarily share all the same goals, but they do share the goal of reversing the 2017 tax cuts.

There are legal ways to reduce your exposure to these tax increases. There are several trusts, for example, that could help:

For individuals, you may worry that the Democrats will reduce the estate and gift tax exemptions. If that happens, your estate or family could owe more money when the time comes. If your circumstances allow, you may wish to transfer some of your wealth to a spousal limited access trust (SLAT).

A SLAT is created for the benefit of your spouse and funded by a gift. That means you incur the gift tax at the current, presumably higher, exemption rate. The trust doesn’t go through probate, so you avoid later estate taxes.

You and your spouse can each create a SLAT benefiting the other, but the terms of the two SLATs cannot be identical. They must be meaningfully different or the IRS will perceive them as reciprocal and thus ineligible for the gift tax exemption. Caution: SLATs are best for people in solid marriages.

Another option for transferring your assets to a trust while still being able to access the income is a lifetime charitable remainder trust. You gift assets to the trust now, so you get a tax exemption now. The terms of the trust are set up so that the assets go to charity upon your death. In the meantime, you have income from the assets to spend as you see fit. The remainder goes to the charity.

You may also get a capital gains tax break if you donate appreciated assets to the charitable remainder trust.

A 529 plan is a good way to fund a loved one’s education with money you donate today. Married couples can currently put $150,000 into the account per child. The donation itself is not tax deductible, but the earnings of the 529 plan are tax free as long as they are used for post-secondary education.

There are many options that could help, each specific to your particular situation. Contact a business or estate planning attorney about how to protect your assets from aggressive future taxation.