Certain revenue-raising proposals that would have affected the transfer tax regime and estate planning of high-net-worth individuals and trusts, which were included in the prior proposed bill in the House of Representatives, have been deleted from the newest proposed legislation.
The current proposal from the House Rules Committee does not include onerous grantor trust restrictions, an early reduction in the federal estate, gift and GST tax exemptions or an elimination of valuation discounts for nonbusiness assets, all of which were included in an earlier proposal of the House Ways and Means Committee. See our September 29, 2021 Client Alert, U.S. House Proposals Would Significantly Impact Estate Planning for High Net Worth Individuals If Enacted (goodwinlaw.com), for more information about those prior proposals.
In order to increase revenue, the current proposal would impose a surtax on individuals with income in excess of $10 million per year and on trusts at much lower income levels. If passed, planning regarding trust income and distributions will become much more important.
Please keep in mind that ongoing negotiations could further modify the current legislation; some or all of the prior proposals could be added back in or new proposals could be raised. If you’ve been engaging in planning to address the previous proposals, please consult with your tax advisors or estate planning lawyer to discuss how the newest proposals may affect your plans.
