Despite Estate Tax Uncertainties, Better Not Procrastinate

While Obama might be procrastinating about what to do about the estate tax, you’d better not.
President Barack Obama was supposed to tackle the thorny issue of the
estate tax from the get-go, considering that the expiration date was
already set for 2010.

Mr. Obama is at heart a cautious man. During his 2008 campaign, he
pledged to raise income tax rates for top earners, but has since
reneged, as advisors have told him that such an elimination of high
income “tax cuts” as Republicans like to call them – would have an
adverse effect on a chronically ailing economy during a deep recession.

Despite the “Death Tax Repeal” movement’s best efforts, it looks like the estate tax is here to stay.
Democrats seem determined to act with deliberate speed to prevent the
estate tax’s scheduled repeal. A prior levy on large inheritances was
first approved by Congress under President George W. Bush in 2001.
Rollbacks were phased in, albeit slowly, with a full elimination in
place for next year.

The Senate Finance Committee is expected to propose legislation to
reverse the scheduled elimination in lockstep with a likely
announcement of the Obama Administration’s detailed estate tax
preservation proposal in his October 2009 budget. This anticipated
“swift action” by Democrats was associated with a rationale that it
would be politically more difficult to initiate their plan to
resuscitate the estate tax once it was gone.

Under the Obama plan detailed during the campaign, the estate tax
would be locked in permanently at the rate and exemption levels that
became law in 2009. Estates of up to $3.5 million (twice that for
couples) would be exempt from any taxation. The value of estates above
that would be taxed at 45%. If the tax were restored to Clinton-era
levels, the first $1 million would be excluded from being taxed and the
remainder taxed at 55%.

Nearly a year has gone by since candidate Obama’s campaign promises
were initially voiced regarding the estate tax. But despite the
procrastination of our elected leaders, a version of the estate tax
will likely be still in place next year, although the sort of
permanency that estate planners might have wished for may remain
elusive. So despite the fact that uncertainties exist and are likely to
linger, it’s not the time to “sit on the fence” when planning your
estate. Contact your elder law attorney or estate planner at your
earliest opportunity to review your personal situation.

Gene Osofsky is an East Bay elder law attorney in California. Gene
Osofsky specializes in Medi-Cal planning, wills, probate, trusts,
nursing home issues, special needs planning, and disability planning.
To learn more about East Bay elder law lawyers, East Bay elder law attorney, Medi-Cal planning, Medi-Cal planning lawyers and The Law Offices of Osofsky & Osofsky, visit Lawyerforseniors.com.