On March 12, 2026, Senator Chris Van Hollen introduced the Strengthen Social Security by Taxing Dynastic Wealth Act. This proposal raises the current estate and gift tax rate from 40% to 45%. Reduces the individual lifetime estate tax exemptions from the current $15M level ($30M per couple) down to $3.5M per an individual’s estate or $7M for a couple’s estate. Reduces the amount an individual can gift during lifetime from the current $15M ($30M per couple) to just $1M per individual or $2M per couple.
The impetus for these changes; the risk of Social Security becoming insolvent as early as 2033, if Congress does nothing, forcing benefits to drop by an estimated 20% placing millions of retirees in financial distress. Add to that reality, the projected costs reaching 1 trillion for the Iran war according to experts including Harvard public policy expert Linda Bilmes.
With the national debt climbing at an alarming rate, it’s becoming impossible for a reticent Congress to keep kicking the can down the road.
While it’s highly unlikely this bill will be enacted during Trump’s term, if the House and Senate’s control shifts to democrats it’s not impossible to imagine that some form of these proposed changes could become law. If Congress and the president are controlled by Democrats after the 2028 election it may be a forgone conclusion that we will see greatly reduced federal estate tax exemptions, potentially with no ongoing inflation adjustments.
So, for individuals with estates higher than the $3.5M exemption or $7M for a married couple, every dollar over those limits will subject the estate to a 45% estate tax liability. Worse yet, if you gift assets during your lifetime, you will be limited to a $1M gift-tax exemption, with every dollar of gift value above $1M subjected to a 45% gift tax.
What should you do if your estate is or will be higher than these proposed limits?
Be proactive and get advice as to what assets you can transfer today using your available lifetime gift and estate tax exemptions. If congress reduces the gift and estate tax exemptions before you take advantage of the current historically high levels, you will lose the opportunity. Anyone with an estate value higher than the proposed exemptions should review their options to shift wealth using the current exemptions available to them to reduce the estate tax burden. If your estate value exceeds the current $15M individual exemptions or $30M exemptions per couple, you should seriously consider gifting assets to the next generations, applying any unused exemptions.
There are many mechanisms that provide the opportunity to shift assets at potential discounts and not only remove the value of the assets from your estate today but also the asset’s income and growth. An indirect benefit of shifting assets may be asset protection for yourself and the beneficiaries of your gifts.
For more information and advice on asset transfer using lifetime gift and estate tax exemptions contact Estate Resource Group at www.estateresourcegroup.com or call their office at 858-209-1474 to schedule a confidential consultation.
