WASHINGTON BUREAU — Insurance experts are still trying to decide just how beneficial the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 will be for life insurers and their customers.
President Obama today brought the act to life by signing H.R. 4853, a bipartisan bill that passed in the Senate Wednesday and in the House Thursday.
The act provides for preserving extended unemployment insurance benefits for 13 more months and renewing many tax incentives created by the Economic Growth and Tax Relief Reconciliation Act of 2001 for 2 more years.
The act will set the personal estate tax exemption at $5 million for 2 years and the top estate tax rate at 35%, and it will reunify estate and gift taxes.
Observers say the act will let settlors, or families that owe estate taxes, buy insurance policies tax-free and, over time, use the policies to help estate beneficiaries escape having to pay estate taxes.
Some insurance policy experts have called the act a bonanza for estate planners and their clients. Other experts have been more skeptical and are suggesting that, in the long run, the contents of the box may prove to be less alluring than the shiny wrapping paper.
Sarah Spear, director of policy and public affairs at the Association of Advanced Life Underwriting (AALU), says passage of the act represents only a temporary victory.
“We are very pleased with the reunification of the estate and gift taxes ? an issue the AALU has championed the last 4 years,” Spear says. “It simplifies estate planning and removes an artificial barrier to intergenerational transfers of business interests and other assets.”
But the AALU would like to see permanent, sustainable estate tax reform in the range of the 2009 law, Spear says.