Future of Estate Taxes

Saturday, August 15th, 2009

Legislative gurus, estate attorneys, and financial planners are bustling about the estate tax’s future.  A lot of people already know that under the 2001 EGTRRA (Economic Growth and Tax Relief Reconciliation Act), federal estate tax changed almost annually for the past few years.  In fact, it’s most likely to phase out entirely next year but will come back in 2011 if things don’t change in Washington. 

Currently, estate tax exclusion rests at $3.5 million (for married couples, $7 million) and top tax rate is at 45%.  When federal estate tax goes back in 2011, the exclusion would drop back - $1 million for individuals and $2 million for married couples, with top tax rate rising to 55%.

Today, most experts would agree that estate taxes are here to stay considering that budgetary challenges occupy congress and the current administration.  Also, economic crisis is still underway.  Legislation has been introduced to keep exclusion at current levels and marry this exclusion to lifetime gift tax exemption. 

At this point, it’s still too early to tell the ultimate fate of the current proposal and all others that are bound to be proposed during the coming months.  In the meantime, those in the know solidly believe that it’s important to revisit your current estate plan as well as undertake proactive tax planning.

Tags: attorneys, EGTRRA, estate attorneys, estate plan, estate tax, federal, financial planners, legislation, legislative gurus, proposal, tax planning, Washington
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