Potential Estate Tax Details

[ronin]

Some interesting reading on the Senate's version of the estate tax deal:

The 'Death Tax' Is Reborn - WSJ.com

 

[Ted_Shepherd]

Inflation Indexing

Here's the element I was looking for: "Inflation indexing. The $5 million exemption would be indexed for inflation beginning in 2012, which suggests the drafters foresee an extension." Sounds good to me. Depending on inflation, investment results, and my longevity and spending habits, I could bust the five million limit sooner or later.

 

[dgoldenz]

While I don't agree with the estate tax in general, the fact remains that if they take in less revenue from the estate tax, they will need to impose higher taxes while people are alive one way or another. We already know that the likelihood of the government reducing spending is slim to none at this point, especially with healthcare reform subsidies going into effect in 2014.

This proposal also doesn't help people planning for estate taxes because it sunsets in 2012. As the national debt increases, is it more likely that they will keep the $5M exemption or reduce it to a lower level to take in more taxes? Heirs shouldn't count their chickens before they are hatched, and I think a lot of estate planning attorneys are going to still recommend people plan for lower exemption levels than $5M.

 

[73ss454]

Not a problem I have to deal with. (heh)

 

[youbet]

I think a lot of estate planning attorneys are going to still recommend people plan for lower exemption levels than $5M.

I think estate planning attorneys will always recommend people make plans involving work by estate planning attorneys at high prices to try to skirt laws other attorneys in Congress pass. That how our system works.

 

[Independent]

One important "detail" is that the $5 million exemption is per individual, so it's $10 per couple, if handled correctly. The "portability" section in this bill supposedly makes it easier for a couple to use the full $10 million.

 

[ronin]

One important "detail" is that the $5 million exemption is per individual, so it's $10 per couple, if handled correctly. The "portability" section in this bill supposedly makes it easier for a couple to use the full $10 million.

Lessens the need for an AB trust to avoid losing part of the credit when the spouse is to be the heir. Truly "unifying" the credit is a nice touch as well.

 

[dgoldenz]

Lessens the need for an AB trust to avoid losing part of the credit when the spouse is to be the heir. Truly "unifying" the credit is a nice touch as well.

It also allows someone to give away a substantial amount of real estate while they're still living at present values instead of upon death at likely higher future values. Still, I'd be surprised to continue seeing the exemption level at $5M+ per person for the long term.

 

[ronin]

It seems like for tax planning purposes, 2 yrs. is the long term these days.

 

[ziggy29]

From the article:

The Senate's bill makes this regime effective only for 2011 and 2012. At that point the provisions "sunset," and if Congress doesn't act, the 2013 top rate would again be 55% and the exemption $1 million per individual. So that may mean more estate-tax drama two years from now.

Enough temporary laws that sunset already! Fix it ONCE and leave it alone. Doesn't matter whether it's income tax rates, the estate tax or the AMT. I think uncertainty about future tax policy is preventing a lot of productive investing whether it's individuals or businesses -- with bad results for both the economy and the Treasury.

When no one feels confident about long-term commitments of capital because of how changes in tax policy might affect it in the future, you know there's a problem.

Fix it ONCE. Get it right. Make it permanent and stop these "kick the can" games where we have another "crisis" in a couple years. Frankly I think all the tug of war over income tax rates is more damaging to the economy than setting it once and leaving it alone for a long, long time.

 

[youbet]

It seems like for tax planning purposes, 2 yrs. is the long term these days.

I think it's important that the rules change regularly. If they don't, attorneys, CPA's and other professionals involved in estate planning might not have zillions of clients running in for help in responding to the latest changes.

 

[youbet]

Fix it ONCE. Get it right. Make it permanent.

You are sooooo funny Zig! Gawd, I slid right off my chair laughing when I read this........!

 

[ziggy29]

You are sooooo funny Zig! Gawd, I slid right off my chair laughing when I read this........!

Yeah, I know. But it's really frustrating that these clowns can't seem to understand how much economic damage the constant uncertainty about future tax policy is causing. Unless, of course, they receive campaign contributions from CPAs and tax lawyers, in which case they understand but don't care...

 

[dgoldenz]

Yeah, I know. But it's really frustrating that these clowns can't seem to understand how much economic damage the constant uncertainty about future tax policy is causing. Unless, of course, they receive campaign contributions from CPAs and tax lawyers, in which case they understand but don't care...

There's that cause and effect relationship again...

 

[clifp]

Yeah, I know. But it's really frustrating that these clowns can't seem to understand how much economic damage the constant uncertainty about future tax policy is causing. Unless, of course, they receive campaign contributions from CPAs and tax lawyers, in which case they understand but don't care...

Ziggy stop being a Grinch. Didn't you know that we have almost 10% unemployment? If we didn't have Congress constantly fiddling with tax code, we'd have lots of unemployed CPA, and lawyers, and don't forget lobbyist.



Taking the side of Congress since 1901