Monday, April 29, 2019
In January of this year, Senator Bernie Sanders introduced S309, otherwise known as the “For the 99.8 Percent Act” in the Senate. Because many of the propositions within the bill deal with changes in the tax code, any person involved in estate planning or wealth preservation should meet with their financial advisor to determine the appropriate steps. If passed, the Act will become effective January 1, 2020. This most likely not occur now with the current political set-up, but if the Democrats in 2020 take control of the presidency, the House, and the Senate, there is a material risk that some or all of the proposals will be enacted.
The Act rolls backs many of the changes that occurred in the Tax Cuts and Jobs Act. These alterations include lowering the estate tax exemptions to $3.5 million; reduces gift tax exemptions to $1 million; raises the highest estate tax rate to 77%; includes in the gross estate of a decedent all unrealized appreciation in their “grantor” trusts; imposes material restrictions on the use of grantor retained annuity trust (GRATs); limits the duration of dynasty trusts to 50 years, even in states that allow them in perpetuity; eliminates almost all valuation discounts on transfers of privately held entities; and virtually eliminates most Crummey powers from trusts.
As these changes run the gambit for many prudent clients, they should speak with their advisors to determine if any strategies they are using will have to be altered.
See William D. Lipkind, Beating Bernie’s Bill in 2019, WinsonNesler.com, April 25, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.