Brian Galle, David Gamage, and Bob Lord, in a new law review article entitled “Taxing Dynasties” (forthcoming, 174 Univ. Penn. Law Review _____ (2025)), estimate that around $4.5 trillion is already inside GST exempt dynasty trusts and will remain beyond the estate and GST tax even if Congress eliminates GRATs, IDGTs, and valuation discounts. The authors argue that this shows that such measures are not adequate solutions. Instead, they argue that Congress should adopt something along the lines of a 1-2% tax per year on these GST exempt dynasty trusts, which would be a credit against any future transfer tax. They argue this small annual tax would avoid liquidity problems and that such a small amount over a longer period of time is more likely to be acceptable.
