Westchester attorney suggests why dying in 2010 may be the ultimate estate plan

About eight months ago when I started this blog, I jokingly suggested that if you wanted to save your family thousands of dollars in estate taxes, you might want to think about dying in 2010 as the ultimate estate plan. That’s because unless Congress rushes through a revised estate tax law there will be no federal estate tax next year.

This year, the federal estate exemption has jumped to a whopping $3.5 million. That means, if you are one of the lucky ones not to have lost every red cent to the Bernie Madoff and Allen Stanford ponzi schemes of this world, you can pass along $3.5 million to your heirs free of federal estate tax but the clock is ticking fast on that deadline. (By the way, anything over that amount faces a federal estate tax of 45% in the rest of 2009.)

Well, here’s the better news……………if you die in 2010 (you must plan very carefully now), you won’t have to worry about any estate tax, at all, on ANYTHING. Yes, you heard me right. Federal lawmakers, in their infinite wisdom, drafted estate tax legislation that essentially evaporates in 2010. That means you can pass along an unlimited amount of assets to ANYONE (including yours truly), and not worry about one red cent of federal estate taxes. Talk about advanced directives! This is way better than pre-paying your funeral!

This estate tax black hole will have a very short lifespan, so plan accordingly. By 2011, the federal estate tax comes back in a big way, at a whopping 55%, and the exemption falls back to $1 million dollars.

Congress is busy in the holiday crunch, as we all are.  So, last week, The House passed the Pomeroy Bill by a very narrow margin of 225 to 200.  That bill permanently extends current estate tax law, preserving the $3.5 million exemption and the 45% maximum tax rate.  However, the Pomeroy Bill has a lot of baggage attached to it and that makes it highly unlikely to be passed by the Senate, since the Democratic chairs of both he Senate Finance and Budget Committees have publicly stated their displeasure with the measure…………ahhhhhhhh, legislative poetry.

President Obama has done his darndest to push through everything he promised during his campaign…….but in the first twelve months?  I guess his grandma never told him that haste makes waste because Congress has been so busy chasing its tail on a very shaky health care plan and gearing up to send troops to Afghanistan that it forgot our economy is still tanking.  The lawmakers rush off the Hill each year around this time but I bet the holiday train pulls out of the station a lot faster this year.

So, where does that leave your average Joe and his will?  My advice would be if you have a will then sit tight because the likelihood of you having over $3.5 million this year is a fantasy anyway.  On the other hand, if you do not have a will, make it a priority for the new year but know that it will have to be reviewed and possibly amended or redrafted once Congress decides what to do with the estate tax law.

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One thought on “Westchester attorney suggests why dying in 2010 may be the ultimate estate plan

  1. Pingback: Westchester attorney unwraps the gift tax credit « Lady Litigator – Lisa Fantino

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