The House Ways and Means Committee recently released a draft proposal of new tax increases to help pay for the much anticipated $3.5 trillion House budget proposal. While this proposal will no doubt evolve as it moves through the political process, it gives us some idea of what the White House and Democrats are seeking. While there are many tax increases, the estate tax proposals may require the most immediate action for some.
Their proposal is to cut in half the current gift, estate and generation skipping tax (GST) exemption, diminish the value of the grantor trusts that are frequently used in estate planning and dramatically restrict valuation discounts that have long been used to leverage gifts to beneficiaries.
Reduction in Gift, Estate and GST Exemptions
The gift/estate/GST exemption of $5 million was passed into law back in 2010 with a scheduled increase for inflation annually. Former President Trump doubled the exemption for 2018 to 2025 with the signing of the 2017 Tax Cut and Jobs Act (TCJA). Even though the higher exemption was scheduled to revert to the $5 million adjusted for inflation in 2026, the new proposal accelerates that to Jan. 1, 2022. Thus, the current gift/estate/GST exemption of $11.7 million would be reduced to roughly $6 million.
Please select this link to read the complete article from OSAP Strategic Partner Clark Schaefer Hackett.