Congress Proposes Cuts to Estate and Gift Tax Exemptions Don’t Ignore This

Senator Chris Van Hollen introduced the Strengthen Social Security by Taxing Dynastic Wealth Act, which includes significant cuts to the high estate and gift tax exemption. Under this proposal the federal estate tax exemption could drop to $3.5M, the gift exemption could drop to $1M, and transfer tax rates could increase to 45%. With the potential for a change in control in Congress in the upcoming elections, and the clever tie in of estate tax changes to fund Social Security which cannot be permitted to lapse, practitioners should not ignore this proposal. Practitioners may want to change documents they draft today! The implications for transfer tax planning, trust drafting, and client advisory strategies will be discussed. The program provides a technical yet practical analysis of how reduced estate, gift, and portability thresholds, higher marginal rates could reshape planning conversations for a far broader client base than in recent years. Drawing on current legislative proposals and emerging state level tax trends, the webinar explores how traditional approaches—such as portability only planning, formula clauses, and high exemption drafting defaults—may require reassessment. Particular attention is given to post mortem planning choices, basis management under compressed exemptions, GST and dynasty trust considerations, leveraged transfer techniques, and access oriented structures such as SLAT variants, SPATs, and domestic asset protection trusts. Risk framing, including reciprocal trust doctrine and step transaction exposure will be addressed. How should advisers recalibrate client communications, drafting, and practice management protocols? Trust drafting recommendations to use now, even with the low probability of enactment, will be discussed.

Speakers: Martin Shenkman, Esq., Jonathan G. Blattmachr, Esq, and Robert S. Keebler, CPA.