On June 11, 2010, the New York Times published Confusion Over the Dormant Estate Tax Keeps Advisers Busy, by Paul Sullivan.
The article states that confusion over the estate tax is keeping advisors busy. It also provides some reasons why advisors are busy:
- planning for the scheduled return of the estate tax with an exclusion of $1M and a tax rate of 55%
- creating GRATs before congress restricts them -– see my category GRATs for more information about Congress’s efforts
- taking advantage of the 35% gift tax rate in 2010 -- “the lowest gift tax rate since 1933”
Sullivan explains that the law is unfair. While 2010 could be a “bonanza” for the wealthy, 2011 could “snare” the merely wealthy:
If Congress does not reinstate the estate tax this year, 2010 could be a bonanza for the nation’s richest. . . .
The real problem comes for the merely rich — individuals worth more than $1 million and less than $3.5 million and couples with net worths of $2 million to $7 million who previously did not have to worry about the estate tax. If Congress fails to act again this year, the estate tax laws next year will revert to their levels before 2001, and that could snare a host of people who set up the estate plans on the assumption that there would be no tax when they died.
(Special thanks to Michael Hepner, a benefits professional, for bringing this article to my attention.)