Estate and trust taxation and planning techniques are two areas substantially impacted by the upcoming changes proposed this fall by Congress and the Biden Administration. It is essential that individuals and entities dealing with estates and trusts understand the pending changes and take advantage of planning before the opportunity ends with the passage of the legislation. The information below is based on the most recent Version of HR 5376 – The Build Back Better Act – released October 28, 2021.

This briefing was assembled by the team of tax experts and specialists at Mercadien. We help our clients navigate through disruption, and proposed changes to tax law will be disruptive for many individuals and businesses. For assistance or consultation, contact Mercadien online or by calling 609-689-9700.

Unless otherwise stated, the proposals listed below will go into effect after December 31, 2021.

5% Surcharge Tax for Estates and Trusts

The House Ways and Means Committee is considering a 5% surcharge tax, which applies to modified AGI in excess of $200,000 for estates and trusts.

Special Use Valuation Increased From $750,000 to $11.7 Million

The tax proposal 2032A, which would be effective December 31, 2021, increases the maximum aggregate reduction of property attributable to special use valuation from $750,000 to $11.7 million.

Net Investment Income Tax Applies to MAGI that Exceeds $12,500

For estates and trusts, net investment income tax will apply to modified adjusted gross income that exceeds $12,500.

New complexities in this area of estate planning escalate a need for consultative support.

The opportunity to use existing estate planning techniques may be closing quickly.  It is important that you are prepared: our team at Mercadien is well-equipped to assist you through these changes. Contact us to learn more.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.