Vermont Senator Bernie Sanders proposes doubling the top death tax rate to 77% from 40% as a new way to tax the wealthy in America. Bernie is the Vermont Senator in his second run for the Democratic presidential nomination. He wants to lower the personal exemption from the current $11,400,000 to $3,500,000.
From 1941 to 1976 the top death tax rate in effect was 77%. Bernie is proposing to bring back this 77% tax rate for those with $1 billion or more. For those with more than $3.5 million, he wants a death tax of 45%. Mr. Sanders also is proposing to curb some estate planning techniques that let the wealthy individuals reduce or avoid the death tax.
Democratic presidential candidate Senator Elizabeth Warren from Massachusetts proposes an annual wealth tax of 3%. Representative Alexandria Ocasio-Cortez wants a new 70% income tax rate.
What should you do now? Before the November 2020 election you should consider making gifts to your children and to your grandchildren to avoid these new death taxes, new wealth taxes, and new income taxes.
You also have the opportunity to transfer your property to your children and grandchildren so that it would be “protected” against their future creditors, predators, gigolos & floozies, and the death tax. California is a very litigious state. Giving your children assets is not the same thing as giving them protected assets. Your children cannot create this protection for themselves, only you can protect their assets by passing your assets to your children in an ongoing trust. How would you feel if your grandchildren never received their inheritance?