The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 may have hurt demand for the kinds of life insurance policies used in estate planning.
Executives at National Financial Partners Corp. (NFP), New York (NYSE: NFP), a financial service distribution company, talked about the effects of the act during the company’s recent second-quarter earnings call.
President Obama and Congress negotiated the 2010 tax act in July 2010, in an effort to bridge the gap between Republicans, who wanted to extend the tax breaks created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and the Democrats, who wanted to extend a variety of enhancements to social welfare benefits, such as unemployment insurance.
EGTRRA phased out the federal estate tax in 2010 but was set to return the tax to 2001 levels in 2011.
The 2010 tax act compromise set the size of the estate that is exempt from the estate tax at $5 million. The top estate tax rate is now 35%.