In a recent article published by Kiplinger, the article stresses the importance of wealthy individuals acting quickly to prepare their estates after details of Bernie Sanders’s Estate Tax Proposal.
After Sanders’s Estate Tax Proposal, a bill known as the “For the 99.5% Act,” among other proposed changes to estate and gift tax policies, anyone with an estate of $3.5 million or more should consider contacting an experienced estate planning professional, like the estate lawyers at Rhodes Law Firm in Augusta.
Sanders’s “For the 99.5% Act” would cut the federal gift and estate tax exemption amount from the current $11.7 million to $3.5 million. The reduction would not occur until Jan. 1, 2022. The same timing applies for the bill’s proposed reduction of the gift tax allowance to only $1 million, which means that people will not be able to gift more than $1 million after 2021 without paying a gift tax.
The current maximum federal estate tax rate is 40%. The 99.5% Act proposes to increase the estate tax rate to 45%, once a deceased person’s taxable estate exceeds $3.5 million and 50% and higher when the amount subject to tax exceeds $10 million, maxing out at 65% for estates over $1 billion, but that increase would not apply until 2022. In addition to the above exemption and tax changes, gifting of up to $15,000 per year per person would be limited to $30,000 per donor per year for gifts to irrevocable trusts or of interests in certain “flow through entities” beginning in 2022.
Essentially, estate plans and strategies could change drastically and some of the things we’ve grown accustom to knowing may not be the same if President Biden signs the 99.5% Act bill into law. Learn more about the proposed estate tax law and how it can affect your estate plan by contacting the estate planning lawyers at Rhodes Law Firm in Augusta.