NB: This article was published on May 21, 2010 and contains information that may be outdated. For current information regarding the estate tax, read: Estate Tax Certainty…For Now.
Many in the estate planning community were hopeful in the past couple of weeks with news that Senate was close to bipartisan agreement on new estate tax legislation. With the House having already passed its own version, it seemed like Congress was one step closer ending the uncertainty that has prevailed this year.
But earlier this week, The Hill reported that negotiations between Senate Republicans and Democrats had broken down. Republicans and Democrats are arguing about the exemption amount and tax rates, with Republicans wanting to increase the exemption about to $5 million and reduce the tax rate to 35 percent, and the Democrats wanting to keep the exemption amount and tax rate at last year’s levels.
Whether the exemption amount is $3.5 million or $5 million is irrelevant for 99.8 percent of Americans. But if Congress fails to act this year, and the exemption amount goes down to $1 million, it is estimated that more than 44,000 will be affected each year. The old saying about “cutting off the nose to spite the face” comes to mind.