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Estate tax uncertainty: Are you protecting your clients' blind side?

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You may have seen an interesting report in Monday’s Wall Street Journal, which took aim at estate tax uncertainty. The report includes experts from both sides making their best case as to why the estate tax should either be permanently repealed or reinstated, and also asked eight financial planners to weigh in on what their clients should be doing now, despite all the uncertainty. Access the full report here.

In “It’s Unfair, and there’s a better way,” Ed McCaffery argues the tax encourages bad habits among the rich and hurts the nation. His alternative? A tax on spending. In “It’s Fair, and we need the revenue,” Michael J. Graetz argues the tax ensures the rich pay their share — and these days, it’s crucial they do.

No matter which side of the debate your opinion falls, it is clear that just watching from the sidelines, waiting for the dust to clear is not a plan. Your clients need your help to ensure they are prepared for whatever Congress does — or doesn’t — decide to do. We all know if they do nothing, the estate tax will reappear Jan. 1, 2011, with a paltry $1 million exemption and a staggering 55% tax rate. Most think that won’t happen, but then again, most people didn’t think Congress would let the estate tax sunset for 2010, making this the best year tax-wise for the wealthy to pass away since the estate tax was created.

Many think Congress will somehow figure out a way to address the issue in the remaining weeks of the 2010 session, and if they do, a pair of the more likely scenarios from where I sit include:

  • Reinstating the $3.5 million 2009 exemption level with a 45% tax on the balance.
  • Set a $5 million exemption level with a flat 35% tax on the balance.

If you want to hear three seasoned life insurance pros talk about what they’re doing to prepare their clients for the various estate tax scenarios, be sure to join the more than 850 who have already preregistered for Thursday’s “Emerging Trends in Life Insurance” Web Seminar, set to begin at noon Eastern. The event will last an hour and conclude with our three panelists (Thomas J. Henske, CFP, CLU, ChFC, CLTC; W. Luther Pierce IV, CLU; and E. Dennis Zahrbock, CFP, ChFC, CLU) taking audience questions. And it’s free.

Sign up here. Hope you join us, and keep your clients active and prepared in the estate planning arena.

More blog entries from Brian Anderson.


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