Current federal law already gives the transition a familiar anchor: the estate-and-gift tax tops out at 40%, the 2026 federal basic exclusion amount is $15 million, and the GST tax rate is tied to the maximum federal estate-tax rate — which makes a 40% GST structurally familiar rather than novel. The Accord should preserve that recognizable estate-tax spine and add only what the current system is missing: no erased basis, no dynastic escape, and no country-of-residence loophole for heirs.
Separate appreciation from inheritance
The central reform is to separate appreciation from inheritance. If a founder's estate has grown tenfold, most of the estate is not "family property" in any ordinary sense — it is untaxed capital income accumulated over decades. The Accord already closes hold-borrow-die through capital-gains-at-death and step-up elimination, with estate-tax prepayment serving as the disclosure and cataloging mechanism.
Under the revised version, the capital gain is settled first — whether during life through prepayment/realization or at death. Only after that income tax is paid does the 40% estate tax apply to the remaining estate.
Why the accession tax matters
Without a recipient-side accession tax, the estate tax has to do too much work. To prevent one heir from becoming the next patron, the estate tax must climb toward 70% or higher, as earlier Chapter 5 drafts did.
With accession taxation, the estate tax can remain closer to the current-law 40% structure while the recipient-side tax does the anti-dynasty work. The total taking can be roughly equivalent, but the logic is cleaner:
- Tax the gain as income (capital-gains-at-death).
- Tax the transfer as an estate (40% of remainder).
- Tax the heir's accession as income to the heir (recipient-side, progressive).
Domestic and foreign heirs alike
The accession tax must apply whether the heir is domestic or foreign. A U.S. fortune should not escape American settlement by wiring the residue to Monaco, Dubai, Singapore, or a foreign trust. No estate asset transfers until Treasury certifies payment. GST stays at 40% for true generation-skipping transfers.
Trusts should not become century-long family governments: no dynasty trusts, no trust-level CGAL, no private family fiduciary empire. Estates dissolve within a short statutory period — three to five years — with only narrow extensions for operating businesses, litigation, farms, or unavoidable market conditions.
Illiquid assets: a simple rule
An heir may accept the asset at appraised par value and incur the corresponding accession tax, with installment payment or lien treatment for operating businesses and farms. If no heir accepts the asset at par, it is sold by auction or public process. Paintings, collectibles, yachts, passive real estate, and financial interests do not remain suspended in dynastic limbo.
What gets prepaid, and what doesn't
- Estate tax may be prepaid — it belongs to the patron's estate.
- Capital gains may be prepaid or basis-registered — they belong to the asset.
- Accession tax should not be prepaid — it belongs to the recipient. It depends on who receives the wealth, where they stand in the income ladder, and whether the transfer recreates aristocracy or disperses ownership.