Estate Tax in the Spotlight Again

Category: Estate and Inheritance Tax

Congress is again considering a permanent modification to the federal estate tax.

At present, US residents have a $2 million exemption from federal estate tax. That exemption is scheduled to increase to $3.5 million in 2009. There is NO federal estate tax in 2010, and the federal estate tax in re-instituted in 2001 with a $1 million exemption. (Doesn't congress just make the clearest laws).

The Senate recently voted 99-1 in favor or a proposal to fix the exemption permanently at the 2009 levels. This would be good as it would impose some certainty on planning, and remove the incentive for wealthy heirs to have the parents not survive past 2010 (the dark side to a 1 year repeal). Of course, this is merely a resolution, not a law, but it is interesting that it comes to the forefront again in an election year in the midst of a recession.