Once More Into the Breach

On December 17, 2010, Congress once again stepped into the breach - at just about the last minute - and passed The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This was long overdue, and, as a mater of fact, it was something I expected would have passed in the beginning of 2010 and made retroactive to all estates of those dying after January 1, 2010 - the date the federal estate tax was to disappear in its entirety for one calendar year.
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Future Financial Planners: Where We Are Now - Federally, Statewide & With Medicaid

(A) Federal Estate Taxes

1. Unified Credit - The federal unified credit to which all persons are entitled stands at $3,500,000 (a tax savings of $1,440,000) for 2009. According to current enacted law, the federal estate tax is to disappear in its entirety for 2010 only. In 2011, the unified credit is reinstated at $1,000,000 (a tax savings of $345,800).
2. Federal Tax Rates - The maximum federal estate tax rate is 45% for 2009, 0% for 2010, and 55% for 2011 and thereafter.
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A Question of Internet Privacy & Social Networking Website

In the first case of its kind, two employees were fired by their former employer for allegedly making derogatory comments about their jobs outside of work on a private MySpace group page. Groundbreaking case has been featured on ABC Eyewitness News, CNN: American Morning , Wall Street Journal, AOL- National News, FOX News and The New Jersey Law Journal. Read More...

Future of the Federal Estate Tax

Current law, thru December 31, 2008, provides that the Federal Unified Credit that each taxpayer is entitled to at the time of their death is $2 million dollars. This credit rises to $3.5 million dollars in 2009 with the entire Federal Estate Tax disappearing for the year 2010 only. In 2011 and thereafter, only a $1 million dollar unified credit will be available to a decedent with the maximum Federal Tax rate being 55%.

Estate Tax Crystal Ball- A total elimination of the Federal Estate Tax

Given the current status of the economy as well as the platform position of the candidates running for President, I believe that a total elimination of the Estate Tax is extremely unlikely. It is unlikely that the government will relinquish this source of revenue. Given the fact that no one in the know assumes that the Federal Estate Tax will be eliminated, almost all of these selfsame experts believe that their will be a change in the estate tax laws for the better come 2009/2010.

With the 2008 election looming eminent, it appears that both Senator McCain and Senator Obama oppose the estate tax law as it is presently constituted. Senator McCain, not surprisingly, seems to favor a $5 million dollar unified credit for each party and a $10 million dollar credit for a married couple. While Senator Obama seems to prefer leaving the credit at $3.5 million dollars from 2009 forward. Another basic difference between the two candidates is that John McCain seems to favor a maximum 15% Federal Estate Tax rate while Senator Obama prefers a 45% rate. With the Democrats firmly entrenched in the House and Senate, it is more likely that Senator Obama's preferences will govern.

Portability

Under current law, there is an unlimited marital deduction which means that there will be no tax, either federal or state, to a surviving spouse where the spouses have wills leaving all of their assets to the other. However, unless the surviving spouse remarries, this unlimited marital deduction, however, is lost on the death of the second spouse because it is currently not portable. Surprisingly, both candidates favor portability. If portability becomes a law, the surviving spouse would have not only their individual $1 million dollar credit but also the former spouse's $1 million dollar credit. Therefore, the surviving spouse would be able to shield up to twice the amount of property by usage of both credits.