CLIENT ALERT — The Estate Tax Pendulum Swings Again

For readers of the monthly Bulman Dunie e-newsletter over the last several months, you may have experienced whiplash. In the spring, we offered our first prediction as to possible changes to estate tax laws.  We predicted no change to the federal estate tax exemption, but perhaps a change to cost basis rules.

Last month, we offered a dire client alert.  To fund President Biden’s infrastructure bill, the House Ways and Means Committee initially proposed halving the estate tax exemption.  In addition to halving the estate tax exemption, the House proposed eliminating the viability of many grantor trusts.  In other words, the House proposed shrinking the exemption and increasing the pool of resources which would count against the exemption.  These changes could have been effective as soon as December 2021.

The most recent proposal from the White House has completely swung back the other way.  With the scope of the infrastructure bill limited, the White House has now proposed no changes at all to estate tax.  The estate tax exemption would remain at $11.58M per individual until the 2017 Tax Cut and Jobs Act sunsets in 2026.  There will be no changes to the tax treatment of grantor trusts.  There will be no disruption to the use of a “step up” in cost basis at the time of death.

The White House’s most recent proposal seems to have the support of the House.  As such, we no longer predict any significant changes to the federal estate tax in 2021.  The White House instead is focusing on corporate taxes and income taxes to fund its initiatives.

Estate planning clients in Maryland and the District of Columbia may still need to consider state estate tax as part of their estate plan, but we will continue to monitor any further changes in state or federal estate tax laws.

If you’d like to chat about your estate plan, please contact Jeremy Rachlin at or (301) 656-1177, or jrachlin@bulmandunie.com to schedule a discussion.