This article was posted on Tuesday, Sep 01, 2020

Today, estate tax exemptions probably protect 99+% of American families from the risk of transfer taxes (death taxes, gift taxes and generation skipping taxes).  

But, if there is a change of control after the 2020 election, or if control changes later, all of that will probably change dramatically for the worse for many thousands of apartment owner families who do not think they are “rich.”  Many believe that the changes proposed by Bernie Sanders will probably serve as the model for a new administration.  These proposals were made more than a year before the Pandemic expanded the Federal deficit by trillions; with such expansion, there may even be a few Republicans who would vote for increased taxes on the “rich.”  

Changes in the estate tax rules adverse to the wealthy (a much lower threshold than you would imagine) must be anticipated if or when there is a change of control in the White House and Congress. 

Sadly, in the view of politicians, it takes a lot less for you to seem wealthy than you might think. And, because changes adopted in 2021 might be effective as early as January 1, 2021, if you now have a net worth over $3.5 million as a single person, or $7 million as a married couple, you should at least explore strategies that could protect you under current law if control of the White House and Senate changes.


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The Sanders Proposal

Sanders called his proposal the “For the 99.8% Act.”  While I believe it will likely hit more like 3-5% of families in the country, my best guess is that it may devastate 10-25% of AOA members.

A few highlights (or lowlights, depending on your perspective) from Sanders proposal include:

  • Reduce the exemption from estate taxes from about $11.6 million per person now (although a “sunset” provision in current law schedules reducing the exemption in any event in 2026 to about $6 million) down to just $3.5 million (the 2009 exemption) once his proposal goes into effect
  • Increase rates (currently 40%) to
    • 45% up to $10 million
    • 50% from $10 million to $50 million
    • 55% from $50 million to $1 billion
    • 70% above $1 billion
  • End generation skipping exemption beyond 50 years
  • Reduce the lifetime gift tax exemption to just $1 million per person
  • Limit annual exclusion gifts 
    • Today, $15,000 for each giver to each recipient (so, a couple with 2 children and 4 grandchildren can – for now – give up to $180,000 per year!)
    • Proposed: Only $10,000 to one recipient, but not more than $20,000 total per the giver – 
  • Limit Grantor Retained Annuity Trusts (I have one client who used this technique to transfer nearly $30 million in value to heirs using less than $100,000 of his exemption)
  • Impose taxes on proceeds of grantor trusts  (this can make it much more expensive to get property out of your estate without paying gift or income taxes, and without losing effective access to your wealth)
  • Treat donor payment of taxes on grantor trusts as taxable gifts
  • Eliminate the use of valuation “discounts” on partnerships, LLCs or other companies


The net effect of all these changes will expose millions of families that do not think they are “wealthy” to high estate taxes, while limiting their ability to do effective estate tax planning.  If you now have an estate over the reduced exemption, or think your net worth will grow over your life above the reduced exemption, you probably need to at least consider planning before there is change in control.  Even if you do not think a new party has much chance of getting enough control to make these kinds of changes in 2021, sooner or later the pendulum is likely to swing enough in their favor to result in major, adverse changes to the estate tax system!

Can You Protect Your Family 

From Confiscatory Estate Taxes?

The good news is:  The estate tax environment and the tools available for estate tax reduction, have never been better in the last 80 years or so.  We have more strategies, and more variations to allow us to mold strategies to work for YOUR unique situations and goals, than we ever had before.

Furthermore, for most families, we have strategies and techniques that can, under current law, both protect your wealth from these taxes, while also preserving your access to much, or all, of your wealth in case you need or want to spend it in the future.  We believe that most clients will not want to, should not, and need not, impoverish themselves just to save estate taxes.  The current legal climate gives us strategies that can achieve substantial estate tax protection while still making it possible for assets in the strategies to be used for your benefit.

Unfortunately, many of these strategies will either no longer work at all, or not work as well, if anything like the Sanders proposal becomes law.  But, if you get sound planning done before the effective date of changes to the estate tax system, you should be able to either protect your family completely from these tax risks, or (for the very wealthy) at least materially reduce your family’s exposure.


Advanced estate planning, to protect your family under current law from estate tax changes we anticipate if a new party get control in 2021 or later, may not be for everyone.  

Some apartment owners may not have enough at risk to make the planning cost effective.  Others may not want the tradeoffs in complexity or other taxes.  In some cases, the planning may reduce the opportunities for a step-up in basis at death so much as to make it a bad tradeoff.  On the other hand, many politicians, including Biden, have proposed eliminating the step-up in basis at death anyway and, in the long term, we think it unlikely that the step-up will survive unchanged over the near term or certainly, more than the next 10-20 years.

Finally, some strategies may impair the use of the parent-child exemption from property tax reassessment.  While this is probably less of an immediate concern than estate taxes for those with wealth much above the proposed lower estate tax exemptions, it needs to be taken into account.  Fortunately, there are strategies which may be able to maintain the exemption and still get valuable estate tax savings.  In fact, some strategies can leverage the parent-child exemption to protect many millions of low property tax assessments for at least the life of your children!


My estate planning motto has never been truer.  Now more than ever: If you fail to plan WELL NOW, plan to FAIL.”  PLEASE, please, please:  IF you now have, or expect to have, a net worth much above $3.5 million as an individual, or $7 million as a couple, spend some time with an experienced estate planner as soon as possible to evaluate your estate tax exposure if there is a change of control in Washington.  Consider what you can do to reduce or eliminate that exposure.  Don’t let procrastination allow changes in the law to steal decades of sacrifice and hard work from your family.

And, please do not wait until after we know the results of the election in November or later.  It takes time to plan these strategies well and even more time to implement them in the best way.  Planning done under the pressure of a change in administration at the end of the year just cannot be done as well as planning that starts sooner.  

Experience shows that owners of apartments and other income properties care about planning for the future.  Most of you have sacrificed a lot for decades to build wealth, most of which you do not plan to spend, but which you want used to benefit your heirs.  You probably did not build this wealth just to see much of it taken in unnecessary taxes when you die.  Don’t let a change in administration blind-side your family.

If you want to consult with me and my wife Hinda, we would love to video conference with you (until the COVID risk of in person meeting has faded) and help you evaluate your risks and planning alternatives.  If not, please find an estate planner familiar with a range of advanced strategies who is also well-versed in issues relevant to the owners of income properties.

Kenneth Ziskin, an estate planning attorney, focuses on integrated estate planning for apartment owners to save income, property, gift and estate taxes.  He also provides trust and probate administration assistance after the death of a loved one.  He holds the coveted AV Preeminent peer reviewed rating for Ethical Standards and Legal Ability from Martindale-Hubbell, a perfect 10 out of 10 rating from legal website AVVO.Com, and is multiple winner of AVVO’s Client Choice Award. See Ken’s website at

Ken also offers FREE CONSULTATIONS FOR AOA MEMBERS in appropriate cases.  Call him at (818) 988-0949.  

This article is general in nature and not intended as advice for clients.  This article may be considered attorney advertising.  Please get advice from counsel you retain for your own planning.  Drafted in July, 2020.