Proposed Tax Legislation

You may have seen the proposed tax legislation released on September 13, 2021. We are providing this information to keep you informed about the issues surrounding this legislation and the effects it may have on your estate plan.

The proposal addresses, in part, income tax, estate, and gift taxes. We intend to provide information about the estate and gift tax changes we deem most relevant to our clients; specifically, those individuals and married couples with a net worth over $6M and $12M, respectively.

First, the current $11.7M (almost $24.0M for a married couple) lifetime estate and gift tax exemption would be reduced by half on January 1, 2022. To benefit from the current high exemption, any new planning would have to be in place before that date.

Second, Grantor Trust planning is at risk. Traditionally, Grantor Trusts are trusts where the creator of the trust is obligated to pay the income tax, which opens the door for creative planning. These trusts include Spousal Lifetime Trusts (SLATs), 678 Trusts (BDTs), Defective Grantor Trusts (DGTs), and Irrevocable Life Insurance Trusts (ILITs). Under the current proposal, if legislative changes to the Grantor Trusts pass, it will be effective as of that date. This leaves very little time to put these protections in place before this potential date. If you already have an existing Grantor Trust in place before this potential date, you will be grandfathered in.

We are watching the proceedings and will keep you informed. If you feel you need to make changes to your estate plan to take advantage of any of these planning tools before they are gone, please call the office and set a time to discuss your current plan. Please keep in mind that all meetings and calls are billed at our hourly rate.


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