Big changes in the federal estate tax began on January 1, 2010. These changes could impact many unsuspecting households.
Two of the most significant changes you should know about are:
The elimination of the estate tax benefits wealthy individuals and families who are the least in need of a tax break. The capital gains tax change will impact many more families than the estate tax and creates new challenges for executors of wills. Finally, the uncertainty of the situation makes estate planning extremely difficult right now since it’s so unclear what Congress will do.
The problem started back in 2001 when the Bush Administration promoted and Congress passed an estate tax law that reduced estate taxes for wealthy Americans. It was believed that Congress would fix the huge flaws in the law. But in the nine years since it was passed, they have not done that. So, here we are with a mess and it's unclear how Congress will deal with these changes and when.
To learn more about this issue, this Wall Street Journal article provides a good backgrounder on the issue. And a recent New York Times editorial also weighs in on the problems caused by Congress when they refuse to fix the estate tax.
One group, United for a Fair Economy, has been working on preserving the estate tax since 1999. They’ve pointed out that the estate tax is one of the most progressive taxes around. Learn more about estate tax issue at the UFE website.
And, now that you have lots of questions about the estate tax and how it impacts you, you can still sign up for MRG's estate planning workshop on February 6th in Portland.