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Navigating Estate & Tax Planning in 2021

Higher Taxes. Lower Exemptions. Fewer Options.

We are here for you and your family. Click below to get started on creating or updating a comprehensive estate plan.

Time Is Running Out to Protect Your Wealth








It’s When, Not If

At best, you have until January 1, 2022 to implement crucial tax mitigation and trust planning strategies. At worst, your options may disappear as soon as a bill is enacted.

Your best strategy to avoid suffering negative impacts from these reforms is early, proactive planning.

Headline Estate & Gift Tax Reforms

The Senate Budget Committee Chairman, Bernie Sanders, formally proposed the “For the 99.5% Act” on March 25, 2021. This bill would make consequential changes to the current estate and gift tax system. The bill appears to have widespread support in both the Senate and House. The bill takes aim at wealth transfers on multiple fronts.


Decrease to Individual Estate Tax Exemption

How will this affect me?

Sanders’ proposed bill includes a reduction of the individual estate tax exemption from $11.7M to 3.5M. That’s a 70% decrease! For a married couple, their combined estate tax exemption could drop from $23.4M to $7M! If your individual assets exceed $3,500,000 or your combined married assets exceed $7,000,000, you may be negatively impacted.



Decrease to Lifetime Gift Tax Exemption

How will this affect me?

Sanders’ proposed bill includes a reduction of the individual lifetime gift tax exemption from $11.7M to $1M. That’s a 108% decrease! In short, individuals will not be able to gift more than $1M without triggering a taxable event. Additionally, per person, per year gifts will be limited to $15k. If gifting is part of your tax planning strategy, you may be negatively impacted.



Increase in Estate Tax Rates by Bracket

How will this affect me?

Sanders’ proposed bill includes a new graduated system for estate tax brackets. The new rates increase to 45% for estates valued at $3.5–10M, 50% for estates valued at $10–50M, 55% for those valued at $50M–$1B, and 65% for estates valued above $1B. If your individual or married estate is valued at $3.5M or above, you may be negatively impacted.


Additional Tax Proposals

Two more proposals have beeen thrown into the ring that focus on capital gains tax. Senator Van Hollen’s “Sensible Taxation and Equity Promotion Act” and President Biden’s “American Families Plan” will increase the kinds of transactions that are subject to capital gains tax. They also will be retroactive to 2021.

Van Hollen Proposal
  • Gifts to be treated as property sale and subject to capital gains tax.
  • Transfers into grantor trusts could trigger capital gains tax unless assets included in taxable estate at death.
  • Non-grantor trusts to be subject to gain recognition events every 21 years.
  • Step-up in basis at death to be eliminated.
  • All provisions to be retroactive to January 1, 2021.


Biden Proposal
  • Capital gains to be taxed at ordinary income rates. Retroactive to some time in 2021.
  • Gifts and transfers at death to be subject to capital gain recognition.
  • Termination or transfers into, from, or between trusts to be subject to capital gain recognition.
  • Trusts, partnerships, or other non-corporate entities to be subject to a gain recognition event every 90 years.
  • Step-up in basis at death to be eliminated.


Headline Trust Planning Reforms

Generation and Dynasty Trusts

These long-term trusts allow Grantors to set assets aside that will benefit multiple generations. These so-called Dynasty Trusts have been exempt from the generation-skipping tax (GST).

The proposed bill requires that these multi-generational trusts be taxed occasionally as generations change. The GST would now apply with no exclusion to any trust set up to last more than 50 years. Moreover, pre-existing Dynasty Trusts will be deemed “terminated” 50 years after the passage date of the bill.

Grantor Retained Annuity Trusts (GRATs)

Funds transferred to GRATs are not considered taxable gifts, and earnings arising from these assets can pass to family members tax free. Short-term GRATS (so-called “Walton GRATs”) have been found to be a particularly effective tax planning strategy.

The Sanders proposal would impose a minimum 10-year term on any GRAT. It would also require that a portion of the initial funding be considered a gift for tax purposes: As written, the lesser of 1) 25% of the fair market value, or 2) $500,000.

Defective Grantor Trusts

Defective Grantor Trusts offer income and gift tax benefits because the trust is both exempt from federal estate taxes and considered owned by the grantor for income tax purposes. Grantors can take advantage of multiple techniques to exchange or sell trust assets all on an income tax-free basis.

The proposed bill would, in effect, require Defective Grantor Trusts be fully funded before this bill passes. If not and the trust was created, funded, or transacted with after the new law was enacted, the death of the Grantor would trigger a taxable event.

Your Goals.

Your Legacy.

Our Help.

Your Financial Legacy Blueprint

Your ability to direct, protect, and preserve your financial legacy depends on having a comprehensive estate and asset management plan in place. During the Financial Legacy Review we will begin to outline your Financial Legacy Blueprint by considering these six key areas.

Estate Planning

Work with us to create an individualized estate plan that meets your current financial goals and secures your financial legacy as well as your family’s future.

Estate and Gift Tax Planning

Properly implented tax mitigation strategies are a critical aspect of any comprehensive plan to protect a financial legacy.

Wealth Management

Take advantage of all of the available strategies to secure your wealth and ensure ongoing financial stability for your family.

Asset Protection

Proactive planning to protect your valuable assets from creditors, lawyers, malpractice claims, foreclosures, or disaffected family members.

Trusts and Asset Distribution

Trusts allow you to designate precisely how and to whom your property and assets are distributed during your life or after your death.

Probate Avoidance Strategies

Take the necessary steps to avoid probate, spare your family stress, and ensure your assets and property are distributed according to your wishes.

Protect and Preserve Your Financial Legacy.

Be proactive. Ensure you’ve taken necessary steps to protect your wealth and assets and mitigate estate and gift taxes. Schedule your free Financial Legacy Review today to get started.

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