Democratic House Members Propose Returning Estate Tax Rates and Exemptions to 2001 Levels and Imposing Other Restrictions on Estate and Gift Tax

Democratic Ways and Means Committee member Jim McDermott (D-Wash.) and Rep. Charles Rangel (D-N.Y.) have introduced H.R. 3467 (Nov. 17, 2011), “the Sensible Estate Tax Act of 2011,” which would raise the top estate and gift tax rate (and the sole GST tax rate) to 55 percent, lower the applicable exclusion amount to $1 million, indexed for inflation after 2012 (but using inflation adjustments starting from 2000), restore the state death tax credit, restrict the use of valuation discounts for investment assets, require grantor retained annuity trusts to have a minimum ten-year term, require consistent basis reporting between an estate and the person acquiring property from the decedent, and eliminate the protection afforded by an allocation of GST exemption after 90 years.  This is a major departure from the current exclusion amount of $5 million afforded to decedent's estates.  We will keep you posted as this legislation develops.