ESTATE TAX REFORM PROPOSAL AND REMINDER

Estate Tax Reform Proposal and Reminder

On March 25th, 2026, U.S. Senator Chris Van Hollen (D-Md.) reintroduced the Strengthen Social Security by Taxing Dynastic Wealth Act, legislation ostensibly to improve the solvency of the Social Security Trust Fund with revenue generated by undoing Republicans’ major cuts to the estate tax in 2017 and 2025.  His intended purpose is to tax the richest families in America that pass down vast wealth from generation to generation.  This vast wealth is that exceeding $3.5 million.  This bill returns the estate tax to 2009 levels and invests those funds in Americans’ retirement security.

As a reminder, the current estate, gift, and generation skipping tax exemptions are $15 million each.  Many clients have sought to shelter their exemptions over the last few decades by currently using them, but while continuing to have direct or indirect access or control.  Much of that planning was done when imminent fiscal cliff’s (potential tax reform) necessitated immediate action within short timeframes.  This often-forced exposures to risks that the IRS could object to tax planning pursued, by arguing violation of the reciprocal trust doctrine or the step-transaction doctrine.  As such, now would be an appropriate time to revisit whether any steps should be taken to perfect prior planning or to pursue additional planning.  President Trump’s tax reform, The One Big Beautiful Bill, made current exemptions permanent, meaning there is no fiscal cliff where current law reverts to old law and reduced exemptions. Nevertheless, a shift in government control could cause legislative change.  Given President Trump is in office through 2028, time is not pressing but it is valuable in pursuing this type of planning.

We are happy to answer questions or comments and are pleased to be of assistance!

Joe Kempe