Monday, June 28, 2010

How to Plan for the Future While Estate Tax Debate Continues in the Senate

With all the estate tax proposals currently floating around the Senate the future of the estate tax is anybody’s guess... but that doesn’t mean we’ll stop trying to figure it out. A recent article in the Wall Street Journal touches on some of the more recent (and more controversial) proposals floating around Washington.

The proposal that is currently getting the most attention comes from Vermont independent Sen. Bernie Sanders and three Senate Democrats who say that "It's time for multi-millionaires and billionaires to pay their fair share."  And pay they would!  According to Sanders’ proposal “the [estate tax] exemption would be $3.5 million for an individual or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million.”

Of course, it’s too early to get worked up just yet, Sanders’ proposal is just one of many right now, and the debate still rages in the Senate with no clear winner in sight.  Of course, if no action is taken the estate tax will come back in 2011 with a 55% tax rate on estates above a mere $1 million. 

Either way, you’ll want to be prepared, and the only way to do that is to keep in contact with your estate planner and make sure that your plan is designed to handle anything.  Although it may be tempting to wait to update your estate plan until a clear decision is made, all that really does is leave your family unprepared if something should happen to you while the tax is in flux.  Contact our office to find out what adjustments should be made to your estate plan to keep your family protected while lawmakers continue to debate the future of the estate tax.