President Obama and congressional Democrats want to freeze the estate tax at its current level rather than allowing it to disappear (according to the current law) in 2010. The Senate Finance Committee is expected to move within the next few weeks to reverse the current law, and Mr. Obama should present his estate-tax preservation proposal in his next month’s budget.
The Democratic plan is a defeat for the small business groups and others who created and funded the effort to repeal the “Death Tax.” While most estate taxes are collected from the “ultra rich”, family businesses struggle with it as well and often spend precious time and energy finding ways to minimize the tax so that their businesses can be passed from generation to generation.
None of this news will be a surprise for my clients. Even when the current law was enacted, I was letting people know that the law would expire in 2011 and that, unless Congress acted, the estate tax would revert to the old threshold of $1 million and a rate of 55% (that right, 55% off the top to the federal government — don’t forget at least 3% to the state as well.)
Now that we have an idea about what the current administration expects to do to raise money from estates, it is a good time to review your assets and your estate plan and give some thought as to how you plan to protect what you have and to preserve it for the next generation.