Senator Bernie Sanders introduced this legislation on March 25, 2021, targeting wealth taxation for the highest earners. The proposal includes several key provisions:

Personal Wealth Changes

• Federal estate tax exemption reduced to $3.5 million for U.S. citizens
• Gift tax exemption lowered to $1 million with an effective date after December 31, 2021
• Progressive tax rates increasing to 45% (over $3.5m), 50% (over $10m), 55% (over $50m), and 65% (over $1 billion)

Grantor Trust Modifications

• Elimination of step-up basis at death for grantor trust assets
• Minimum 10-year terms and 25% remainder requirements for retained annuity trusts
• Reduced discounts for family limited partnership transfers

Dynastic Trust Restrictions

• Constraints on trusts exceeding 50-year periods to prevent generation-skipping tax avoidance

Distribution and Gift Tax Updates

• Trust distributions subject to federal gift tax
• Annual gift exclusion capped at $20,000 for certain transfers

There remains uncertainty regarding congressional passage, but high-net-worth individuals should consider alternative strategies given emerging wealth tax discussions.