Lawmakers Scramble to Extend the Estate Tax

The bonanza of passing one's estate free of federal estate tax might actually happen on January 1, 2010. Due to a quirk in the tax code, the estate tax and generation skipping tax ("GST") are repealed for one year starting next year. Currently, anyone with a taxable estate of less than $3,500,000 is exempt from Federal Estate tax (and in Missouri from state estate tax as well). The Senate is considering legislation that would extend the $3,500.000 exemption another year in essence repealing the repeal of the estate tax. But, with time running out and the agenda focused on health care reform, there may not be time to do anything this term.

Starting in 2011 the Federal Estate Tax and GST tax would return and tax everything that one owns in excess of $1,000,000 at a 55% rate. This means that those who are very rich could take advantage of the one year repeal by dying in 2010. While this is a tough advice for any client, think of the social mayhem that could result by leaving such tax policy in place? Congress needs to act responsibly and deal with this legislation before it adjourns. Stay tuned for further updates.