Democratic Senators Take Aim at Trust-Based Tax Planning
Senators Murray and Wyden unveiled the Fair Trusts for Fiscal Responsibility Act of 2026
Last week, Senators Patty Murray and Ron Wyden introduced the Fair Trusts for Fiscal Responsibility Act of 2026. The bill is aimed squarely at ultra-high-net-worth individuals who use trust arrangements to avoid transfer taxes. We want to walk through what the bill actually proposes, because even if you are not in the “billionaire” category, some of these tools show up regularly in farm estate planning.
The Core Problem They Are Trying to Solve
The senators are frustrated that wealthy families can use certain trust structures — Grantor Retained Annuity Trusts (GRATs), dynasty trusts, and generation-skipping trusts to move enormous amounts of wealth to heirs while largely sidestepping estate and gift taxes.
To put some numbers on it, the one-pager accompanying the bill estimates that GRATs alone cost the federal government more than $100 billion in lost revenue between 2000 and 2013. That is just one type of trust. Experts believe hundreds of billions, possibly trillions, of dollars are sitting in generation-skipping trusts that are exempt from the rule against perpetuities, thanks to changes many states have made to their laws.
The senators’ view is that if you can afford a team of estate planning attorneys and wealth managers, you should not be able to zero out your transfer tax bill.
What the Bill Actually Does
Rather than trying to close individual loopholes one at a time which Congress has attempted many times before, often creating new loopholes in the process this bill takes a different approach. It creates a new annual withholding system on large trusts.
Here are the brackets:
