Many of you have heard me get on my soap box about the need for up-to-date estate work like Wills, Power of Attorney documents, Advanced Medical Directives, etc., and the probability that the laws that govern those documents would be changing in the future. Well, the future is upon us.
The “Economic Growth and Tax Relief Reconciliation Act of 2001” set in motion the inevitable repeal of the federal estate tax, the death tax. The full repeal was to take place January 1, 2010 and would have affected several areas of tax law. The problem is that I and many others never saw much of a chance that the law, which was passed during the George W. Bush administration, would actually come to fruition.
On November 19th, Representative Earl Pomeroy (D – North Dakota) introduced “The Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009”. The bill will halt the 2010 estate tax repeal and extend the 2009 exemption of 3.5 million dollars for an individual and impose a 45% maximum estate tax rate. 3.5 million dollars sounds like a substantial sum of money and indeed it is, but consider your total estate net worth. Add up the value of your house, your cars, checking and savings accounts, 401(k)s, life insurance and other personal property. My point is that the dollars start adding up quickly and depending on how your estate work is set up, assuming you have these documents, you may not be taking full advantage of the exemption.
On December 3, 2009 Rep. Pomeroy’s bill passed the House of Representatives along party lines with a vote of 225 – 200. Republican leaders have countered, asking for an exemption increase to 5 million and a 35% maximum tax rate, but because of the current push on healthcare reform, the estate tax bill seems to have been temporarily tabled in the Senate. It is felt that a vote will be called early next year and if passed the law will be made retroactive to January 1.
The bottom line is that estate tax law change is in the air and there has been little media attention pointed in this direction. If you don’t have a Will or you can’t remember the last time your legal documents were updated, now is the time to address them. Call or email me and we can discuss how to make sure you are able to take full advantage of your exemptions.
