Within the estate planning community the common tease among clients has been for several years that in order to maximize your estate to beneficiaries the year to pass away was going to be 2010. Why? Because current tax law reflected the fact that there would be no estate tax for anyone who died in 2010! Then for 2011 it would revert back to where the law was in 2001 which is unacceptable to all of us.
Well I for one could not conceive of our current administration in the federal government letting those potential tax dollars slip away and unfortunately it does not look like they will be proving me wrong. My eyes inside Washington D.C. tax newsletter gives every indication that congress will patch the tax law for next year and freeze the current estate exemption at the 2009 level of $3,500,000 as well as the top estate tax rate of 45%.
Instead of this patch what we really need is a clear direction going beyond next year so that proper estate planning can be put in place with strategies to avoid the shrinkage at death that results from estate taxation. I continue to have discussions with clients on this issue and would much prefer a set of ground rules in the tax code going forward rather than a discussion of probabilities on exempted estate asset levels or highest tax rates. We need to be able to move on in our planning.
My concern is that estate tax matters will be treated the same as the alternative minimum tax problem. Every calendar year end congress does another patch for the upcoming year to correct a tax injustice to so many taxpayers. At this point I can only hope that these issues will be addressed once we get beyond the healthcare issue, if we ever do!
