Potential Estate Planning Issues Under the Proposed “For the 99.5 Percent Act”

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Senator Bernie Sanders (I-Vt.) recently introduced S. 994, 117th Cong., 1st Sess. (March 25, 2021), the “For the 99.5 Percent Act,” which would reduce the estate and GST exemption equivalent to $3.5 million, reduce the gift tax exemption equivalent to $1 million, raise the transfer tax rates to 45% on estate, gifts, and transfers of $3.5 million to $10 million, 50% on estates, gifts, and transfers of over $10 million and not over $50 million, 55% on estates, gifts, and transfers of over $50 million and not over $1 billion, and 65% on estates, gifts, and transfers of more than $1 billion, and eliminate the use of many estate tax planning techniques.

The techniques that would be limited or eliminated include marketability and lack-of-control discounts for the nonbusiness portion of an entity, GRATs, intentional grantor trusts, dynasty trusts, and Crummey annual exclusion withdrawal powers. The bill has four co-sponsors, Sen. Sheldon Whitehouse (D-RI), Sen. Kirsten E. Gillibrand (D-NY), Sen. Chris Van Hollen (D-Md.), and Sen. Jack Reed (D-RI).  For clients with significant estates this would be an important time to review your estate plan and utilize your current $11.7 million exemption amounts before they are eliminated.

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