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119-s-4490119th CongressWALLET

Fair Trusts for Fiscal Responsibility Act

Sponsored By: Senator Murray, Patty [D-WA]

Introduced

Summary

This bill would create an annual tax on trust assets and new reporting and valuation rules to tax and track high-value trusts. It would add progressive brackets, a trust withholding credit account, estate coordination, and gift treatment for grantor-trust taxes.

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  • Beneficiaries and families would receive annual information statements showing a trust's net assets and each beneficiary's present-value interest. Reports are due by April 1 and the rules include an example exception for persons with aggregate present-value across trusts of at least $250,000.
  • Trustees and trusts would face a new annual net-asset tax computed in progressive brackets and capped by statute, with rates topping out at 3.0%. Trustees must maintain a Trust Withholding Credit Account that tracks taxes paid and credits available when distributions occur.
  • Estates and grantor-trust owners would see coordination rules that add trust withholding-account balances to the decedent's gross estate and allow credits for previously paid trust asset taxes. Payments by deemed owners of grantor trusts would be treated as taxable gifts and many provisions apply to calendar years beginning after 2026.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 0 benefits, 2 costs, 2 mixed.

Grantor trust tax payments as gifts

If enacted, amounts equal to taxes paid by a deemed owner for an applicable grantor trust would be treated as taxable gifts in the year paid. Reimbursements by the trust during that same year would prevent gift treatment. The date of the gift would be the earlier of year-end, the day before the owner's death, or when the owner renounces reimbursement rights. The bill would also deny charitable and marital deductions for amounts treated as such gifts and disallow income tax deductions for chapter 16 taxes. These rules would apply to amounts paid or incurred after enactment.

New annual tax on big trusts

If enacted, applicable trusts would pay an annual tax on the trust's net assets measured on the last day of each calendar year. Rates would be 0% up to $50 million; 1% up to $100 million; 1.5% up to $250 million; 2% up to $1 billion; and 3% on amounts above $1 billion. The trust-level tax would be capped by a formula using the trust's net assets, the trust withholding credit account balance, and the highest estate tax rate. These rules would apply to calendar years beginning after December 31, 2026.

Trust credit accounts and estate tax

If enacted, the bill would create trust withholding credit accounts for applicable trusts and beneficiaries. Accounts would increase when trusts pay chapter 16 taxes and when beneficiaries receive qualified distributions, and decrease on distributions or taxable terminations. The bill would let previously paid trust-asset taxes reduce estate and generation‑skipping transfer (GST) tax by credits, but it would also "gross up" GST taxable amounts and require including account balances in a decedent's gross estate. The GST and estate coordination rules would apply to transfers and decedents after December 31, 2026.

Beneficiary bracket allocations and reporting

If enacted, the bill would set dollar bracket thresholds ($50M, $100M, $250M, $1B) and let beneficiaries allocate unused bracket amounts to trusts based on present-value shares. The statutory bracket amounts would be inflation-adjusted after 2027 using 2026 as the baseline. The bill would also require trustees to file annual trust statements by April 1 and beneficiaries to file allocation statements by June 1, with an exception when a person's total present-value interests are under $250,000. Failures to file or furnish would face new penalties. These rules apply to calendar years after December 31, 2026.

Sponsors & CoSponsors

Sponsor

Murray, Patty [D-WA]

WA • D

Cosponsors

  • Sen. Wyden, Ron [D-OR]

    OR • D

    Sponsored 5/12/2026

  • Sen. Van Hollen, Chris [D-MD]

    MD • D

    Sponsored 5/12/2026

  • Sen. Booker, Cory A. [D-NJ]

    NJ • D

    Sponsored 5/12/2026

  • Sen. Alsobrooks, Angela D. [D-MD]

    MD • D

    Sponsored 5/12/2026

Roll Call Votes

No roll call votes available for this bill.

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