Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Tax Planning > Tax Reform

Estate Tax May Stay At '09 Levels - Clarified

Your article was successfully shared with the contacts you provided.

WASHINGTON — Democrats have included an estate tax freeze provision in a 5-year budget proposal.

The provision would freeze the estate tax at the 2009 level, with a $3.5 million per-person exemption, and a 45% maximum tax rate that would be indexed for inflation.

Congressional leaders expect the House to take up the budget legislation today, and for the Senate to follow suit by the end of the week.

The final version of the budget resolution will help set the rules that will govern the budget process, but it will not lead directly to funding appropriations.

David Stertzer, chief executive of the Association for Advanced Life Underwriting, Falls Church, Va., said the AALU is “encouraged that lawmakers are now focusing on the planning simplification features associated with reform, rather than just the rate and exemption levels.”

Under current law, the estate tax would be phased out in 2010, but would return in 2011 with a $1 million per-person exemption and a 55% maximum tax rate.

The AALU has been urging Congress to set permanent estate tax rules and include a reunification provision.

AALU lobbying has focused on the reunification issue, and the Joint Tax Committee says the provision would cost only $4 billion in federal revenues over 10 years, Stertzer says.

“AALU understands the fiscal pressures associated with reform, but the low cost of reunification compared with the critical social policy of preventing the perverse incentive to hold assets until death rather than gifting those assets during life is an extremely beneficial policy” for everyone, Stertzer said.
CLARIFICATION: Early readings of the budget resolution agreement indicated that the estate tax provision would be considered through the streamlined “budget reconciliation” process, which cuts the number of votes needed to get a measure through the Senate to 51, from 60. It also appeared that the budget resolution agreement provision would include estate and gift tax reunification, along with a portability clause that would eliminate the need for couples to set up a trust for a “second to die” spouse to get the entire $7 million exemption. The AALU has since informed us that the agreement appears to call for handling the estate tax provision under “regular order,” and that it does not appear to include reunification and portability provisions.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.