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Estate Planning Tax Law Changes 2021

Changes To Estate And Gift Tax Law

The New Tax Law: The 99.5% Act

On March 25, 2021, Senator Bernie Sanders introduced a bill into the U.S. Senate to impose higher taxes on certain estates. The bill is called “For the 99.5% Act” and proposes changes to estate tax law and gift tax law. Shannon Miller and her team explain how these proposed tax law will impact you.

Changes to Estate Tax Threshold

Currently, the estate tax exemption amount for 2021 is $11,700,000.00 per individual ($23,400,000.00 for married couples who use their estate tax credit when they die). An individual’s leftover estate tax exemption may be transferred to the surviving spouse after the first spouse’s death. The current taxable rate is 40% on the overage.

Bernie Sanders’s new bill would lower the estate tax credit “coupon” to $3,500,000.00, with a combined estate tax credit of $7,000,000.00 for married couples.

The taxable rates would be as follows:

Estates less than $10M – 45% tax rate

Estates $10M to $50M – 50% tax rate

Estates $50M to $1B – 55% tax rate

Estates more than $1B – 65% tax rate

What does this mean? This means that an individual who dies with assets that are valued over $3,500.000.00 would owe 45% in taxes on the overage (or more) of that threshold (see example calculation below).

What is included in your taxable estate?

Taxable estate assets include: Trust and Probate Assets, life insurance, IRAs, joint accounts or joint property, and homestead property, along with anything else you own at your death.

Example Of New Tax Law In Effect

Decedent who owned assets jointly with spouse and does not have a trust-based plan funded and in place at time of death:

Individual Retirement Accounts (IRAs) $1,500,000.00

Homestead Real Property $500,000.00

Life Insurance $1,500,000.00

Investments, other Assets $600,000.00

Tangible Personal Property $100,000.00 (Cars, Furniture, etc.)

TOTAL ASSETS $4,200,000.00 (each spouse owns $2,100,000.00)

ESTATE TAXES DUE WITHOUT PROPER TRUST-BASED PLANNING $315,000.00 $700,000.00 x 45% = $315,000.00 (Check must be written to US Treasury)


What should you do to avoid possible estate taxes?

Establish a trust-based plan with your spouse, then fund assets into each spouse’s trust — we can help.

Changes to Gift Tax/Annual Exclusion The annual gift tax exemption amount is currently $15,000.00. This means you can gift up to $15,000.00 per year to any person without reporting the gift to the IRS. Under the proposed bill, the lifetime gift tax exclusion amount will be reduced from $11,700,000.00 (a combined estate and gift exclusion amount) to $1,000,000.00 (for gifts only).

The annual exclusion amount will be capped at $20,000.00 per giver. Should a gift be made over the exclusion amount, an IRS 709 gift tax return is required and accrues against the lifetime exemption amount of $1,000,000.00. Any lifetime gifts over $1,000,000.00 will be taxed as follows:

Lifetime Gifts over $1,000,000.00 will be taxed at 45% rate
Lifetime Gifts over $10,000,000.00 will be taxed at 50% rate
Lifetime Gifts over $50,000,000.00 will be taxed at 55% rate
Lifetime Gifts over $1,000,000,000.00 will be taxed at 65% rate



Connect with The Miller Elder Law Firm:

If you need guidance regarding the new tax law, you may call us at 352.379.1900 or complete the form below and we will contact you. We can help you navigate through the new laws and what they mean to your estate and your family.

Author: Shannon Miller

Florida Bar Board Certified Elder Law Attorney and founder of The Miller Elder Law Firm, Shannon Miller is one of the leading elder law attorneys in Florida with decades of experience advocating for our seniors and adults with disabilities. This level of expertise comes from the thousands of cases she has successfully litigated, her direct advocacy at the state legislature (including drafting legislation) to protect seniors, and collaboration with other stakeholders in improving the lives of seniors and vulnerable adults. She currently serves as Secretary of the Elder Law Section of the Florida Bar.

In addition to the expertise of the firm, what makes The Miller Elder Law Firm special is the way clients are cared for, from the moment they call or visit the office to the conclusion of their case. The mission of every staff member is to help clients through the sometimes complicated process of getting older and suffering the infirmities of aging and death with dignity and independence. The Miller Elder Law Firm team strives to provide every client with a bright retirement and end of life that is as full as possible. Everyone deserves to be heard, protected and confident in their end of life plan.