Current Status of Trust and Estate Planning: Rule Changes Remain Fluid in Washington

Authored by Mark Lobb

A revised 1,684 pages of the Build Back Better Act (the “Act”) was released on October 28, 2021.  This revised text was referenced by President Biden as the “Framework.”  The prior proposed changes in the Act which would have substantially altered traditional estate planning with grantor trusts and other items have been eliminated. Changes included in the earlier version of the Act but not included in this recent version include:

  • Lowering the estate tax exemption from $11.7MM to $6,020MM,
  • Inclusion of grantor trust assets in the grantor’s estate,
  • Tax realization event for sales to and from the grantor and a grantor trust; and,
  • Elimination of valuation discounts for transfers of nonbusiness assets. 

There remains the following:

  • A surtax on high-income earners,
  • Expansion of the 3.8 percent net investment income tax; and,
  • Funding for greater IRS enforcement targeting wealthy taxpayers.

Obviously, the fun and game are not over and I am sure the Virginia election result will stir the pot, but this is where we currently stand in regards to estate planning.  

The negotiations are fluid and more changes are likely to be incorporated into the Act. 

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Authored by Mark Lobb

A revised 1,684 pages of the Build Back Better Act (the “Act”) was released on October 28, 2021.  This revised text was referenced by President Biden as the “Framework.”  The prior proposed changes in the Act which would have substantially altered traditional estate planning with grantor trusts and other items have been eliminated. Changes included in the earlier version of the Act but not included in this recent version include:

  • Lowering the estate tax exemption from $11.7MM to $6,020MM,
  • Inclusion of grantor trust assets in the grantor’s estate,
  • Tax realization event for sales to and from the grantor and a grantor trust; and,
  • Elimination of valuation discounts for transfers of nonbusiness assets. 

There remains the following:

  • A surtax on high-income earners,
  • Expansion of the 3.8 percent net investment income tax; and,
  • Funding for greater IRS enforcement targeting wealthy taxpayers.

Obviously, the fun and game are not over and I am sure the Virginia election result will stir the pot, but this is where we currently stand in regards to estate planning.  

The negotiations are fluid and more changes are likely to be incorporated into the Act.