New Tax Proposal Threatens Valuable Trust & Estate Strategies

As anticipated, the Democrat’s new tax proposals threaten many of the trust and estate strategies that taxpayers currently rely on to mitigate estate tax and preserve more wealth for their heirs.

The House Ways and Means Committee proposal issued last week outlines the proposed changes. Many of the details may change as the bill makes its way through a chain of debates and votes, but this initial draft provides a good deal of insight into what we can anticipate and why you should act as soon as possible.

The proposal includes changes to:

  • Grantor Trusts – Irrevocable intentionally defective grantor trusts (IDGTs) currently enjoy several tax benefits that would be eliminated immediately under the tax proposal and make all additions to the trust taxable to the estate.
  • Estate Tax Exemption – Currently, the lifetime estate and gift tax exemption is a generous $11.7 million. This would plummet under the new proposal to approximately $6 million beginning in January 2022.
  • Valuation Discounts of Nonbusiness Assets – The proposal would also do away with certain valuation discounts for nonbusiness assets held in limited liability companies (LLC), partnerships and other private entities.

If any of these changes would affect your gifting plans, the time to act is now.

Lisa Rispoli Lisa Rispoli is the Partner-in-Charge of Trust & Estate Services at Grassi and leader of the firm’s Private Client Services group. She has over 30 years of experience in accounting, estate planning & valuation, as well as gift, estate and trust taxation. Lisa is adept at working with clients and their professional advisors to develop estate plans to transfer family, business and personal wealth... Read full bio

Categories: Tax, Trusts & Estates