The question on everybody’s minds the past few months has been “what legislative action will be taken regarding the expiration of the estate tax in 2010?” Well, Congress has adjourned for the year and the answer to the question is… Nothing.
With Congress home for the holidays and no action taken, the estate tax is still slated to disappear on January 1st, reverting in 2011 to the old rate of 55 percent for estates worth more than $1 million. But before you get too excited, take a moment to read what this article in the New York Times has to say:
“Jere Doyle, wealth strategist at Bank of New York Mellon, said the wealthy should not get their hopes up for an end to the estate tax. He pointed out that an estate did not have to submit its first tax bill until nine months after a person’s death. The Senate could wait, then, until the summer to decide on the estate tax and make it retroactive to the beginning of the year. This would wreak havoc on estate planning. Even if the Senate acted early in the coming year, it could still lead to a flurry of legal challenges on the constitutionality of reinstating a tax that had disappeared.”
It turns out the Congress’s failure to act has not made it easier for you to pass your wealth onto your children, it has only made things more uncertain than ever. The best action you can take during this “in-between time” is to have your estate plan reviewed by a professional to ensure that you’ve taken the right steps to prepare for whatever the future may bring; and most importantly, do not submit the first tax bill for a deceased’s estate in 2010 without talking to your estate planning attorney first!