Friday, December 04, 2009

Congress Moves on Estate Tax Reform

As many of you know, the Estate Tax law that exists today was established in 2001 and exempts estates with a value less than $3.5 from paying any Federal Estate taxes.  The Estate Tax was to be completely repealed in 2010 meaning no estate would be taxed regardless of size.  Then in 2011 the tax exemption would have fallen back to $1,000,000.  This structure obviously added a great deal of confusion and uncertainty to the world of estate planning.

My long-standing opinion had been that Congress would never allow the one-year repeal to take place because of the patently unfair nature of such a structure.  As more and more time passed without Congressional action however, doubt began to creep into my mind.

Well, yesterday (December 3, 2009) the House passed bill HR 4154 which extends the 2009 exemption amount through 2010.  The Senate is working on a bill that permanently extends the 2009 exemption amount, so we may actually see action this year afterall.   The House and Senate both have to pass a bill and any differences will need to be ironed out in committee before the Bill can be presented to the President to be signed.  Stay tuned.

UPDATE 12/21/2009:  Well I guess with the time spent on the health care bill, Congress could not get to the Estate Tax legislation, so it looks like we're in for a repeal on January 1st.  But the Wall Street Journal is reporting that: "Lawmakers already were promising Wednesday to revisit the issue early next year. One option is to pass a new tax retroactive to the beginning of 2010."

Stay tuned.