Rich Americans have dodged nearly every tax hike proposed by the Biden administration and Democratic senators. But the end is drawing closer for a tax cut from the Trump administration that allowed the rich to give away twice as many millions without paying estate tax.

Currently, individuals and married couples can gift or bequeath #12.06 million and $24.1 million, respectively, before a 40% federal estate tax kicks in. But that exemption is due to sunset at the end of 2025 to $5 million per individual, adjusted for inflation from 2018.

Wealthy taxpayers, including media mogul Michael Bloomberg and Blackstone's Stephen Schwarzman, per ProPublica, often use trusts to avoid estate tax. The market slump is an optimal time opportunity to create new trusts because people can transfer depressed assets at a lower tax basis.

The Trump tax cuts, depressed assets, and rising interest rates have created almost a perfect storm for one of the most popular types of trusts, grantor-retained annuity trusts (GRATs). In the past two months, Katie Carlson of Bank of America's private bank has noticed more clients want to make gifts soon before interest rates get even higher.

"This rising rate environment has been a catalyst for planning," said Carlson, head of wealth strategy. "There's not really an expectation that rates will come down. With a lot of these types of trusts, it is beneficial to have lower rates."

GRATs typically last two years, and pay a fixed annuity to the trust creator (or grantor). Provided the grantor outlives the trust, the beneficiaries receive the appreciation on the assets and it is not subject to estate tax. But in order to receive any gains, the assets have to grow faster than the IRS's assumed rate of return.

This 7520 rate, determined monthly and named after a tax revenue code, has soared due to interest rate hikes, making it harder to reap returns from GRATs. The current rate is 3.8%, more than double from January. In the fall of 2020, the 7520 rate was as low as 0.4%.

"Back in 2020, you could throw anything in there, high-interest performance bonds, a very conservative stock portfolio," said Eric Mann, a partner at Neal Gerber Eisenberg. "But as interest rates go up, you need an asset with more volatility and more growth potential to get over that hurdle rate."