The 99.5% Act – Time to Rethink Your Estate Plan?

While many do not think all of the “For the 99.5% Act introduced by Bernie Sanders plan on March 25, 2021 will become law, there is certainly concern over the gifting and estate tax portions which would seem to affect more than just the upper 1/2 percent of the US population. This is the first attempt at legislation following Joe Biden’s election that could lower the federal estate tax exemption. There are many changes and various dates when the changes would take place:

For those who die or make gifts after December 31, 2021.

  • Reduce the U.S. federal estate tax exemption from over $23 Million to $3.5 million for U.S. citizens and U.S. domiciliaries;
  • Reduce the U.S. federal gift tax exemption which is unified with the estate tax at $23 million to $1 million for with an effective date for gifts made after December 31, 2021  (CONSIDER GIFTING IN 2021);
  • Increase the federal gift and estate tax rate to 45% for the excess value over $3.5 million, 50% for the excess value over $10 million, 55% for the excess value over $50 million, and 65% for the excess value over $1 billion;

Starting when enacted.

  • The disallowance of a basis step up on death for assets held through a grantor trust if the assets are not included in the grantor’s gross estate at the time of death;
  • Grantor Retained Annuity Trusts will be required to have a minimum 10-year term and a 25% minimum value for the remainder interest;
  • Elimination or reduction of valuable discounts for transfers of interests in entities such as family limited partnerships that are not conducting an active trade or business;
  • Constrain the ability to create dynastic trusts that are exempt from generation-skipping transfer taxes, if the trust period is greater than 50 years;

For Trusts Created after the enactment or contributions to trusts after enactment.

  • Distributions to beneficiaries from a grantor trust will be generally subject to U.S. federal gift tax;

Starting the calendar year after the date of enactment.

  • Sharply limit the annual gift tax exclusion up to no more than $20,000 per donor for certain types of transfers such as transfers to trusts.


April Update As of April 2021, the Senate has passed a plan fo the 99.5 Act which if enacted would significantly reduce give tax and estate tax.

If your estate will have more than 3.5 Million, it may be time to do some quick planning to help protect against these changes.  Contact a Jacksonville Estate Planning Attorney to discuss estate planning and asset protection in Florida.



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