Anticipating Potential Modifications in Property Planning – New York Property Planning Lawyer Weblog – April 23, 2021

Senator Bernie Sanders recently presented the “99.5% Act“That focuses on the wealth of the top 0.5% of wealthy Americans. This is the first law passed after President Joe Biden took office that would lower federal estate tax exemptions. Understanding the nature of these changes is important for many people interested in handing over assets to their loved ones.

Changes introduced by the bill

The bill would lead to several critical changes in many tax regulations in the country, including:

  • Increase the progressive tax rate on federal gifts and estates to 45% for value over $ 3.5 million, 50% for value over $ 10 million, 55% for value over $ 50 million, and 65% for the $ 1 billion in added value
  • Reduced United States Inheritance Tax Exemption to $ 3.5 million for citizens and residents of the country
  • Reduced the federal tax exemption to $ 1 million for citizens and residents of the country with an effective date for gifts made after December 31, 2021
  • For people who died after December 31, 2021, as well as for gifts made after December 31, 2021, different conditions apply. First, disallowing an increase in the cause of death for assets held through a grantor trust will occur even if assets are not included in the gross estate of the grantor. Second, the annuity trusts withheld by the grantor must have a minimum term of 10 years and a minimum value of 25% for the remaining interest. In addition, valuable discounts for transferring shares in companies such as family limited partnerships will also be eliminated or reduced.
  • Limit the ability to create dynastic trusts that are exempt from non-generational transfer taxes if the trust is over 50 years old.
  • The distribution of grantor trusts to beneficiaries must be subject to US federal taxes.
  • Limit the annual gift tax exclusion to no more than $ 20,000 per donor for certain types of transfers, including transfers to trusts.

The effects of the bill

It remains to be seen whether the legislation will be accepted in Congress. With the Democrats in control of Congress, many people believe there is a chance that federal tax exemptions could be lowered. However, the bill comes after the introduction of other laws, which are called “Ultra millionaire tax“That proposes a new federal property tax. If either of these laws is passed, it is likely to have a significant impact on succession plan strategies that reduce federal transfers for high net worth individuals.

Get help from an experienced estate planning attorney

The estate planning process is fraught with challenges. One of the best things you need to do to ensure that your estate plan can achieve your goals is with the help of an experienced estate planning attorney. Contact Law firm Ettinger today to schedule a free case assessment.

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