In March 2021, Senator Bernie Sanders introduced a new act—the For the 99.5% Act—which, if passed, would make significant changes to the federal estate and gift tax laws.
Here are a few of the highlights:
- Reduction of the estate tax exemption to $3.5 million per individual and $7 million per couple. The estate tax would continue to be indexed for inflation.
- Increase of the estate tax rate from 40% and establishment of a new progressive estate tax rate structure.
- Decoupling of the gift tax and estate tax exemptions. The proposal seeks to reduce the gift tax exemption to $1 million per person, and the amount would not be indexed for inflation.
- Alter the generation-skipping transfer (GST) tax by placing a maximum of a 50-year term on dynasty trusts.
- Inclusion of grantor trusts in the grantor’s estate for estate—not income—tax purposes, making this type of planning essentially obsolete.
- Restriction of grantor retained annuity trust (GRAT) funding by imposing a minimum term of 10 years and a required minimum gift amount.
- Elimination of valuation discounts for nonbusiness assets.
Portions of this legislation may impact your wealth plan, affecting how you give (and gift) your money. Truist advisors will know what the legislation entails when or if it passes and can help you strategize for the most beneficial future. Contact your advisor to plan your next steps.