Originally appeared in Estate Planning, a Thomson Reuters publication. Copyright 2021 Thomson Reuters/Tax & Accounting.
Estate planners and their clients anxiously await learning what changes may be made to the Internal Revenue Code that will impact estate planning. Numerous proposals have been made recently, including reducing the current $10 million (inflation adjusted to $11.7 millions for 2021) wealth transfer (estate, gift, and generation-skipping transfer) tax exemption to $3.5 million (or less), effectively “outlawing” grantor retained annuity trusts (GRATs), eliminating certain discounts in valuation for wealth transfer tax purposes, reducing the time property may remain free of transfer taxes by limiting how long a trust may remain exempt from generation-skipping transfer (GST) tax, curbing the use of gift tax annual exclusions for transfers in trust, curbing the use of gift tax annual exclusions for transfers in trust, curbing the use of grantor trusts (which are the foundation of many estate planning arrangements) by causing them to be included in the gross estate of their settlors, and eliminating the income free adjustment (typically referred to as a step-up) in basis under Section 1014 for assets included in the gross estate of a decedent.
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