NU Online News Service, June 8, 11:15 a.m. – Lehman Brothers Inc., has published a research report suggesting that the new federal tax law could cut revenue from the sale of estate planning products by roughly one-third.
But the slowdown in estate planning insurance sales should have only a minor effect on the overall performance of large, diversified U.S. life insurers, Lehman analysts predict.
The new Economic Growth and Tax Relief Act is supposed to phase out estate taxes by 2010. Although heirs would still have to pay capital gains taxes on large amounts of inherited wealth, the capital gains tax rate would be much lower than the current estate tax rate, the Lehman analysts write.
Congress complicated matters by including a provision that would bring the current high estate tax rate back in 2011.
The analysts have tried using “decision tree charts” to analyze the effects of the estate tax uncertainty on various types of consumers.