Posted on 12/22/2009 7:08:23 AM PST by SeekAndFind
Next month, for one year only, the federal estate tax is set to go away. Don't break out the cyanide capsules just yet though, because Congress is likely to reinstate the tax retroactively sometime during 2010, as part of a permanent estate tax reform. When doing so, Congress should make sure to get the reform right - this means setting a high exemption so few taxpayers have to comply with the tax, and indexing the tax to inflation so it does not impact smaller estates over time.
A temporary repeal is coming because of the structure of the 2001 Bush tax cuts. The Bush tax reforms gradually cut the estate tax rate and raised the share of an estate exempt from tax, leading to the 2009 exemption of $3.5 million and top rate of 45%. Then, for 2010, the tax is repealed entirely.
By default, tax rates for 2011 revert to prior law, including a 55% top estate tax rate and a $1 million exemption. The idea was that Congress would act later to extend the Bush tax cuts or make them permanent, but instead a Democratic majority took hold and such an extension is unlikely. clear pixel
Fortunately, there is a cross-party consensus that estate tax law set for 2011 is too onerous. In the 2008 presidential campaign, both John McCain and Barack Obama proposed permanent estate tax reforms that set a higher cap and a lower rate. Obama proposed to maintain 2009 law indefinitely. McCain sought greater relief with a 15% rate with a $5 million exemption.
A high exemption is important because it greatly reduces the share of taxpayers who face a compliance burden while paying little tax.
(Excerpt) Read more at realclearmarkets.com ...
I know, we had a death in the family in 2005, and taxes cost us hundreds of thousands. I kept saying too bad he didn’t make it to 2010, we could have bought homes for his grandkids instead of giving it to feds.
Headline is misleading.
From what I’m reading, any estate in 2010 could be tied up legally because Congress will almost certainly rewrite the estate tax laws and can impose a retroactive tax on property inherited but not taxed in 2010.
What a mess.
Delusional,optimistic or both.
I remember how Art Linkletter said how he hated the death tax and that he was going to hold on to 2010 to die. He turns 98 this year.
The House has ALREADY voted to reinstate the death tax at 45% with a $3.5 million exemption (which means that an estate valued at $3.500001 million would be taxed at 45%) immediately. Thus, if the senate follows suit, 2010 will not be a good year to die after all.
Don’t think you can hide any family property behind a trust. The government is working overtime to come up with a way to break trusts, so that every bereaved family will have to impoverish itself.
If you listen to some Democrats, they truly *hate* the very idea of inherited money or property of any kind.
http://www.forbes.com/2009/12/17/estate-tax-lapse-step-up-basis-personal-finance-planning-mess.html
FORBES (Dec. 17 ‘09) Congress Throws Estate Plans Into Disarray: Lawyers see litigation and administrative nightmares resulting from political impasse.
Only the 1st dollar over 3.5 million is taxed at 45%
Vultures taking a “cut” of a dead person’s property is evil and obscene!
What is the status of the Bush Income Tax Cuts? Do the Income Tax Cuts expire on January 1, 2010? Will workers have higher deductions from their paychecks beginning January 1?
The 0bama government will not let you R.I.P, count on it.
Couldn’t agree more.
A person works their whole life to accumulate wealth, bearing the burden of over-taxation every step of the way. They risk their capital to do it. They expend their sweat to do it. They experience losses as well as gains, but persevere and wind up on top when their life comes to an end.
So the government, which didn’t risk a thing, didn’t help but actually served as an anchor around their neck, then feels that it is owed nearly half the deceased’s property, and the relatives aren’t entitled to it.
If you didn’t know anything more about a government than this, you would know if that government had grown to the point it was consummately evil, and even illegitimate.
I wonder how many families are forced to balance the cost of nine more days of life support vs. the dollars gained by a January first death date.
One of my favorite people.
“Congress might dig you up and tax you retroactively.”
Living trusts.
Real trusts.
Go off sheet like Mozart.
Obviously those RATs are not named Kennedy...
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