Estate Tax Odyssey - Part 2
As we are approaching the last quarter of 2009 and 2010 is just a few months away, I expect to hear more and more comments about estate tax and its fate in 2010 and beyond. As I commented in my previous post , the estate tax is currently set to disappear in 2010 and then re-emerge in 2011 at pre-George W. Bush rates, with a 55% tax on the portion of an estate over $1 million.
Just today, in WSJ, Jonathan Weisman wrote an article entitled "Estate Tax Faces Its Own Life-and-Death Struggle", highlighting how the current political climate and political parties might be dealing with a tax set to disappear in 2010 and the expectation of additional tax law changes in 2011.
As mentioned in the article, the debate over healthcare has pushed discussions about estate tax issue to a second tier level, but what I found interesting is that central players on the estate-tax policy also have key roles in the healthcare debate. As it stands now, President Obama has proposed permanently locking in the estate tax at the current 45% with a $3.5 million exclusion but some might worry (as stated in the article) that some politicians might block any action in 2010 to ensure the tax will return in 2011 at the 55% rate with a $1 million exclusion.
Also the stock market fluctuations and deep declines in real estate values may let politicians have a different view on where to tax estates since a dollar today arguably goes further (at least in reference to real estate) then it did a couple of years ago.
So how might all this affect you, if the laws remain unchanged:
· In 2011, more estates will have to pay the estate tax since the exclusion drops from $3.5 million to $1 million.
I am sure we will hear more about this issue, so stay tuned…
