Any individual or family with an estate should stay up to date on the political climate as it pertains to estate taxes. Recently, a newly proposed tax bill that affects how estates and gifts are taxed was announced. Officially called the “For the 99.5 Percent Act,” the bill is also known as the “Bernie Bill” because it is backed by Senator Bernie Sanders.

At The Law Offices of Kimberly Butler Rainen, it’s our job to educate families and individuals about all things estate-related. Here, we’ll go over the details of the not yet approved Bernie Bill, what it means for estate planning, and how our office can help.

Key Points of the Bernie Bill

The For the 99.5 Percent Act was introduced on March 25, 2021. This legislation, if approved, would lower exemption amounts for estate taxes and gift taxes. With the Bernie Bill, the estate tax exemption threshold would be reduced from $11.7 million per individual and $23.4 million per married couple to $3.5 million and $7 million, respectively. In addition, the bill would reduce the gift tax allowance to $1 million, meaning that gifts of over $1 million would be subjected to gift tax. If approved, the proposed reductions would occur January 1, 2022.

The Bernie Bill also proposes to increase the estate tax rate from 40 percent to 45 percent. In this legislation, taxable estates greater than $10 million would be taxed at 50 percent, estates greater than $50 million would be taxed at 55 percent and estates greater than $1 billion would be taxed at 65 percent.

Senator Sanders stated in a Senate Budget Committee hearing that the bill will “demand that the families of the millionaire class not only not get a tax break but start paying their fair share of taxes.” The bill is supported by those who wish to see an increase of taxes on wealthy individuals and opposed by those whose estates are worth more than $3.5 million.

What This Means for You and Your Estate Planning

Most families or individuals who have estate plans in place have likely optimized their estate planning strategies with the current thresholds regarding gift and estate taxes in mind. If approved, the Bernie Bill would impact how certain individuals should approach their estate planning in the future.

These proposed changes will affect those who have assets worth $3.5 million or more per person. It is recommended for those individuals to put arrangements into place prior to the new law, as strategies such as selling assets to irrevocable trusts and using valuation discounts or grantor retained annuity trusts (GRATs) will be grandfathered so long as they are in place prior to the law passing.

The Law Offices of Kimberly Butler Rainen Can Help

Although these proposals have yet to be signed into law, they suggest that there are some impactful potential changes ahead to estate and gift taxing and, as a result, estate planning. For those who may be adversely affected by these proposed changes, there is still time to take action. The best way to do so is to educate yourself on the changes proposed by the bill and to manage your estate with the help of an experienced and knowledgeable estate attorney.

At The Law Offices of Kimberly Butler Rainen, we’re committed to custom estate planning, not only keeping your specific needs in mind but also taking into account any potential legislative changes that might affect you and your family. With years of experience in estate planning and similar areas of law, we can help streamline the process of creating, managing or altering your estate plan. Contact The Law Offices of Kimberly Butler Rainen today to schedule your estate planning consultation, and let us help bring peace of mind to your family.