On Thursday, Senator Bernie Sanders introduced the For the 99.5% Act to reduce the estate tax exemption from the current $11.7 million to $3.5 million. If the bill passes, any decedent that dies with assets exceeding $3.5 million in value will be subject to a tax of 45% – 65% (also increased from 40%) for anything above $3.5 million. This proposed bill reduces the estate tax exemption to 2009 levels.
The gift tax exemption, which is currently unified with the estate tax exemption (i.e., you can give away the $11.7 million exemption amount estate and gift tax free during your life time and upon your death) is also proposed to be lowered to $1 million. As a result, you can give away $1 million during your life time without the imposition of a gift tax.
If passed, this bill would affect roughly 4-5% of the American population by taxing their estate up to 65%.
Some advanced planning could help reduce your family’s exposure to the estate tax. Contact our Firm for estate planning to help minimize the effect of taxes on your inheritance.