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Treasury’s 2024 Green Book Includes Several New Estate Planning Related Updates

The Treasury’s updated “Green Book”, released in March 2023, helps explain the tax changes introduced in the Biden Administration’s 2024 budget while outlining new estate planning related changes. The budget contains numerous tax updates, including reinstating the top individual tax rate of 39.6% for single filers earning more than $400,000 ($450,000 for married couples), taxing capital gains at ordinary rates, with 37% (or 40.8% with the Net Investment Income Tax) generally being the highest rate — or 39.6% (or 43.4% with the NIIT) if the top tax rate is raised, and imposing a minimum 25% tax on total income (generally inclusive of unrealized capital gains) for all taxpayers whose assets exceed liabilities by more than $100 million. Specific to estate planning, the “General Explanations of the Administration’s Fiscal Year 2024 Revenue Proposals” includes several updates: 


  • Simplify the exclusion from the gift tax for annual gifts 

The update would define a new category of transfers and propose an annual limit of $50,000 per donor, indexed for inflation, and eliminate the present interest requirement for gifts that qualify for the gift tax annual exclusion. 

  • Modify tax rules for grantor trusts 

The proposal would close the loopholes that allow taxpayers to reduce their income, gift and estate tax obligations through tax planning through 3 techniques: (i) the funding a GRAT with assets that are expected to appreciate; (ii) the sale of an appreciating asset to a grantor trust by its deemed owner; and (iii) the deemed owner’s repurchase of an appreciated asset from the grantor trust for the asset’s then-fair market value.  

The proposal would require that the remainder interest in a GRAT at the time the interest is created have a minimum value for gift tax purposes equal to the greater of 25 percent of the value of the assets transferred to the GRAT or $500,000, prohibit the decrease in the annuity during the GRAT term; prohibit the grantor from acquiring in an exchange an asset held in the trust without recognizing gain or loss for income tax purposes; and require that a GRAT have a minimum term of ten years and a maximum term of the life of expectancy of the annuitant plus ten years.  

In addition, the grantor’s payment of the income tax liability associated with an irrevocable grantor trust will be treated as a taxable gift. 

  • Limit the duration of generation-skipping transfer tax exemption 

The update would make the GST exemption applicable only to direct skips and taxable distributions to beneficiaries no more than two generations below the transferor and to younger generation beneficiaries who were alive at the creation of the trust. 

  • Adjust a trust’s GST inclusion ratio on transactions with other trusts 

The proposal would treat a trust’s purchase of assets from, or interests in, a trust that is subject to GST tax (regardless of the selling trust’s inclusion ratio), as well as a purchase of any other property that is subject to GST tax, as a change in trust principal that would require the redetermination of the purchasing trust’s inclusion ratio when those assets (or trust interest) are purchased. 

  • Change the GST tax characterization of certain tax-exempt organizations 

The proposal would ignore trust interests held by additional tax-exempt organizations for purposes of the GST tax.39 As a result, the inclusion of such an organization as a permissible distributee of a trust would not prevent the occurrence of a taxable termination subject to GST tax. 

  • Revise rules for valuation of certain transfers 

The proposal would eliminate the use of discounts when valuing fractional interest in certain assets transferred between family members.   

  • Ignore certain defined value formula gift or bequest clauses 

The proposal would result in the nonrecognition of defied value clauses that depend upon the value as ultimately determined by the IRS or finally determined for federal tax purposes; An exception would be where the unknown value can be determined by something specific like an appraisal or is used to define a marital deduction or tax exemption bequest based upon a person’s remaining exemption. 

  • Require consistent valuation of promissory notes 

The proposal would impose a consistency requirement by providing that, if a taxpayer treats any promissory note as having a sufficient rate of interest to avoid the treatment of any foregone interest on the loan as income or any part of the transaction as a gift, that note subsequently must be valued for Federal gift and estate tax purposes by limiting the discount rate to no more than the greater of the actual rate of interest of the note, or the applicable minimum interest rate for the remaining term of the note on the date of death. 

  • Modify the tax treatment of loans from a trust 

The proposal would treat loans made by a trust to a trust beneficiary as a distribution for income tax purposes, carrying out each loan’s appropriate portion of distributable net income to the borrowing beneficiary. In addition, a loan to a trust beneficiary would be treated as a distribution for GST tax purposes, thus constituting either a direct skip or taxable distribution, depending upon the generation assignment of the borrowing beneficiary. 

  • Require reporting of estimated total value of trust assets and other information about the trust 

Certain trusts would be required to annually report information to the IRS for tax data analysis, including trusts that exceed $300,000 or whose grown income exceeds $10,000, both indexed for inflation. 

  • Modify the definition of a guaranteed annuity from a charitable lead annuity trust (CLAT) 

The proposal would require that the annuity payments made to charitable beneficiaries of a CLAT at least annually must be a level, fixed amount over the term of the CLAT, and that the value of the remainder interest at the creation of the CLAT must be at least 10 percent of the value of the property used to fund the CLAT, thereby ensuring a taxable gift on creation of the CLAT. 

  • Extend 10-year duration for certain estate and gift tax liens 

The update would extend the automatic lien 10-year duration during any deferral or installment period for unpaid estate and gift taxes. It would apply to liens already in effect as well as automatic liens on gifts and estates of decedents who have passed away on or after the date of enactment. 

  • Expand definition of executor 

The update would move the definition of executor from Section 223 to Section 7701 of the IRC, authorizing executors to do anything on behalf of the decedent in terms of tax liabilities or other tax obligations. It would also grant regulatory authority to the Secretary, as there may be multiple parties acting as executor. 

  • Increase the limit on the reduction in value of special use property 

The proposal would increase the cap on the maximum valuation decrease for “qualified real property” to be elected as special use property to $13 million. This could apply to real estate such as family farms, ranches, timberland and more. 

If you have questions about estate and trust planning, including how the new budget could affect you and your family, reach out to your Janover representative, contact Dana White, Esq. from the Janover trust & estate team or fill out our contact us form today. 

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