For the first time since 1915, the United States has no Federal estate tax. This situation is scheduled to last only for 2010. In 2011 the estate tax will be restored to the exemption that was in effect in 2001 ($1,000,000.00) with a top rate of 55% rather than the exemption amount for 2009 which was $3,500,000.00 and top rate of 45%.
“If you are at the checkout counter, you might want to expedite things, ” said Representative Richard E. Neal, the Massachusetts Democrat who heads the House subcommittee on taxation. That may be good if the deceased is very wealthy, but most smaller estates will likely incur more taxes because of capital gains on inherited property. This means that the executor of an estate will have to know the tax basis (cost with adjustments for depreciation, dividends reinvested, etc.) of the property owned by the deceased.
“If you are rich, celebrate,” said Senator Harry Reid, Democrat of Nevada and the majority leader. “If you are not, you should be afraid.”
Some tax professionals believe that Congress will extend the estate tax law that was in existence in 2009 sometimes in 2010. Some attorneys believe it is unconstitutional to extend a law that has expired. Some believe a permanent estate tax law will be passed in 2010 that could be effective January 1, 2010.
The bottom line is as of now we don’t have an estate tax law and we have no idea what is going to play out this year.
What should you do?
Review your will with your attorney and CPA and get their opinion as what would happen to your estate in the event of your death in 2010.
-Or-
If you are not very wealthy, pray that you don’t die in 2010.
