Those who are planning to die in 2010 or who may be advising clients that that year would be the optimal time to kick the bucket as a “get the last laugh” way of beating the estate tax, listen up: It appears Congress is likely to rob you of your long hoped-for opportunity to spite the federal government.
You–or your clients–might just as well go on living.
The year 2010 is the year that the estate tax is supposed to disappear completely before reappearing the following year, but with 2001 rates reinstated. Such was the legerdemain of the vaunted Bush tax cuts, but like most sleight-of-hand tricks it was based on smoke and mirrors and a big dose of willing suspension of disbelief.
From this vantage point, in the twilight days of the Bush administration, it is hard to believe that something so absurd on the face of it could have been enshrined in legislation that was passed with an enormous amount of self-preening.
You’ll remember that when the Economic Growth and Tax Relief Reconciliation Act was passed in 2001 the projected budget surplus was in the trillions of dollars. We could easily afford to be generous with the millionaires and billionaires who would be paying estate taxes, the thinking went, and give them a break they so richly deserved.
Well, we know what happened to those projected surpluses whose seeds were planted in the Clinton years. Let’s not forget to give a tip of the hat to Alan Greenspan for his part in scorching those seeds. Thank you, Mr. Fed.
One of the things that this “let’s pretend 2010 doesn’t exist” provision truly has done over the years is wreak havoc with sensible long-range financial planning. Thus, the continuing joke (with the serious undercurrent) that if you were going to pick any year to die, this would be it.
Under the law, the estate tax exemption for 2009 is $3.5 million per person, with a 45% maximum rate for estates above that.