- Democrats may limit some strategies used by wealthy Americans to reduce or avoid estate taxes, according to a list of potential tax reforms connected to their $3.5 trillion budget plan.
- The strategies include grantor-retained annuity trusts, intentionally defective grantor trusts and non-economic valuation discounts.
- They're often used by multimillionaires and billionaires to gift appreciated assets to heirs tax-free while reducing the size of their taxable estate, according to experts.
Drew Angerer | Getty Images News | Getty Images
Democrats may scuttle tactics used by the rich to pass wealth to heirs with little to no tax, part of a broader plan to raise money for an expansion of the U.S. safety net.
Specifically, the party is considering disallowing some complex trust-planning techniques used by wealthy Americans to avoid estate tax, according to a discussion list of potential tax reforms obtained by CNBC.
Congressional Democrats may also ask the Treasury Department to update regulations to "prevent the abuse of non-economic valuation discounts," according to the list. This concept applies, for example, to entrepreneurs who give a minority interest in their business to their kids at a discounted rate.