Monday, March 07, 2011

Are 90 years without transfer taxes enough?

TaxProf points to a WSJ piece that reports the Obama administration would like to limit the tax freedom of dynasty trusts to 90 years.  The trust could remain perpetual, it's just that some sort of transfer tax would be due.  I wonder how the CBO will score this tax increase? Perhaps we could use it to pay for Obamacare?

Current dynasty trusts would be exempt, so the Kennedys and the Rockefellers can rest easy.


JLM said...

Weren't the Kennedy and Rockefeller trusts set up back when they had the rule against perpetuities to contend with? Did these old trusts somehow get rolled over into perpetual models?

Jim Gust said...

Good point. I don't know if those trusts were changed to become perpetual, it only seems like they've been around forever without paying estate or gift taxes.

Depending upon the family circumstances, a trust might last 120 years or so without violating the rule, though 90 was more typical.