10.15.09
More Waiting
Congress’ 2001 estate tax provisions have created delays and uncertainty. For the past three years, if estate planning clients have come to my office with a net worth over $2 million, I’ve told them (i) not to die and (ii) to hold off on a comprehensive estate plan until 2009 because that’s when everything gets changed (in the meantime, we stay with their existing plan or put simple Wills and related documents in place). My rationale: if things don’t get changed, the estate tax gets repealed entirely on 1/1/2010 (meaning that anyone who dies during 2010, no matter how rich, escapes estate taxes), then on 1/1/2011, the estate tax exemption goes back to $1 million. Both scenarios–the no estate taxes and the low exemption–aren’t desired by many people in the Beltway, so everyone thought new estate tax provisions would be passed in 2009.
But 2009 is nearing the end, and nothing is happening. Congress is embroiled in health care, job creation, and other socio-economic scheming. The estate tax situation isn’t being addressed at all.
So what’s going to happen? According to John L. Buckley, the Chief Tax Counsel of the House Ways & Means Committee, Congress will probably just “kick the can down the road a bit.” Speaking at the 2009 Notre Dame Estate Planning Institute, he said Congress will likely extend the 2009 rules into 2010–in effect, buying themselves another 12 months to deal with the situation.
And what then? That’s where it becomes interesting. If Congress then does nothing, the low $1 million estate tax exemption would be re-instilled on 1/1/2011, meaning that far more middle class Americans get stung by it. This would please people on the further reaches of the left aisle in Congress like Charlie Rangel. Rangel and his ilk want more people to pay estate taxes. Democrats could also deflect criticism for it by simply pointing out that they didn’t do anything. They merely left in place the tax scheme implemented by Republicans back in 2001.
Interesting stuff.
