2021 Estate Planning Environment: Part Two

July 12, 2021 by Staff
Estate and Gift Taxes

Part Two of our blog post series focuses on Senator Bernie Sanders’ proposal to change the estate and gift tax laws.  While President Biden’s proposal did not change the existing estate and gift tax laws, Bernie Sanders’ “For the 99.5% Act” proposes significant changes to the current estate and gift tax regime.

Some highlights of the bill are:

  1. Reducing the Estate Tax Exemption to $3.5 million, (from the 2021 amount of $11.7 million).
  2. Reducing the Lifetime Gift Exemption to $1 million (from the 2021 amount of $11.7 million), decoupling the Estate and Gift Tax (i.e. different exemption amounts).
  3. Increasing the Estate and Gift Tax Rate from 40% to a progressive rate starting at 45%, increasing to a top tax rate of 65%.
  4. Significantly limiting effectiveness of valuation discounts.
  5. Limiting the effectiveness of Intentionally Defective Grantor Trusts (IDGT’s) created after the effective date of the Act by including them in the grantor’s estate.
  6. Requiring a 10-year term for GRAT’s with a minimum remainder value (taxable gift) of, the greater of 25% or $500,000.

These are only a few of the proposals in the bill, but it shows how Bernie Sanders plans to attack the current estate planning landscape.  His proposal targets many popular estate planning techniques and significantly limits their effectiveness.  Fortunately, Sanders’ proposal is not retroactive.  Any changes would be effective either on the date the legislation is enacted or after 2021.  This means there should still be time to complete any planning. 

The third blog post will focus on planning ideas to take advantage of the current law.  Remember, it is important to discuss any potential planning with your advisors (benefits, risks, etc.) prior to implementing any plans given the uncertain estate planning environment.


This correspondence is for general information purposes only and does not constitute legal, accounting, or other professional advice. The information contained herein is not related to any individual situation or concerns and should not be relied upon or used as the basis for making decisions without consulting competent legal, accounting, or other professional advice regarding implications of a particular factual situation.