Federal Estate Tax Reform and Certainty Is Needed
by: David M. Frees III, Esquire
Congress failed, at the end of the year to enact any estate tax reform. As a result, the tax was eliminated for a one year period. This might seem like a blessing, but currently, many people’s documents no longer function as they were intended to work. To add insult to injury, in just a few more months it is scheduled to return with a vengeance.
On January 1, 2011, absent congressional action, the tax will return and American tax payers will only be able to shelter one million dollars. A couple could, with careful planning, shelter up to two million dollars but that would require the use of trusts prepared during the lifetime of each spouse. And, as if that is not bad enough, the tax rate is going up to a maximum rate of 55%.
However, since this tax includes retirement accounts, the value of a house and business, and life insurance proceeds, the one million dollars may not go as far as it might otherwise.
We need and deserve clarity on this issue.
Yet, just a few weeks ago, negotiations between Republicans and Democrats broke down and Estate Tax reform disappeared from the legislative agenda.
This is not a political or partisan column. And, for my money, both parties have failed to deal effectively with this issue. I simply believe that Congress owes certainty and clarity to the American people. Right now, careful and rational estate and tax planning for families with substantial assets is almost impossible.
Clarity is essential and now requires congressional action.
Here is video of a recent statement on the Senate floor.