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What the “For the 99.5% Act” Means for Estate Planning

May 18, 2021Tax Planning, Asset Protection & Estate Planning

For the 99.5 Percent Act” (the Act) was introduced in the U.S. Senate in March 2021.  The Act primarily involves estate, gift, and generation-skipping transfer taxes. While the focus is relatively limited, the modifications are significant. Key provisions of the Act include:

  • Reducing the current exemption amount of $11.7 million per individual to $3.5 million per individual, adjusted for inflation;
  • Reducing the gift tax exemption to $1 million per individual, not adjusted for inflation,
  • Eliminating certain valuation discounts for assets; 
  • Treating grantor trusts created or funded by a grantor as owned by the grantor for both income and estate tax purposes; and
  • Reducing the annual gift exemption from $15,000 to $10,000.

Importantly, these proposed changes would primarily affect transfers occurring after December 31, 2021, so the majority of the proposed changes would not take effect until 2022. This means that those who will be affected will have time to make the appropriate tax planning changes where necessary.

The Act has implications, both subtle and obvious, for everything from real estate and retirement planning to how to set up financial powers of attorney, life insurance, and beneficiary designations.  It is crucial to have someone with a comprehensive understanding of tax law and estate planning to guide you through the complexities of this new proposed law..

J.L. Williamson Law Group has many years of experience with both tax and estate planning. Contact us for assistance in navigating and establishing a clear plan for your future and posterity.

For the 99.5% Act | JLW Law Group | Tax Planning | Asset Protection | Estate Planning
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About the Author

Jeffrey L. Williamson | Founder

Jeffrey L. Williamson is the founder of J. L. Williamson Law Group, LLC. The Firm specializes in asset protection, elder law, tax planning, and tax controversy.