A few days ago, the current version of the Build Back Better Act (all 1684 pages) was released, and it had some new provisions for a surtax on very large incomes, including income from trusts and estates. So far, there is no mention of the reinstatement of the income tax deduction for state and local taxes–an important issue for New York residents.
However the good news was that previously threatened and dire changes to the estate and gift tax laws, and certain related income tax benefits, were NOT included, and therefore unlikely to be part of the final package (if any) which may be passed this year.
So, we most likely do NOT have to deal with
- increases in personal income tax and capital gain rates
- reduced estate and gift tax exemption amounts
- increased estate and gift tax rates
And, we can continue to take advantage of:
- Grantor Trusts, and related techniques including sales of property for notes, GRATs (Grantor Retained Annuity Trusts), Grantor CLUTs (Charitable Lead Annuity Trusts)
- the “step up” in basis for appreciated assets received by heirs
- market value discounts for 1) lack of marketability and 2) lack of control of fractional interests in property, assets, or passive business entities such as Partnerships, Corporations or LLLCs
Of course, unexpected last minute deals could change this landscape, and that is what happened with the most important changes instituted by Congress during both the Obama and Trump administrations.
We will post confirmation of any developments worth noting here as the Build Back Better Act completes its tortuous legislative “progress”.