AALU Report on Estate Tax Reform
A recent AALU report, Update on Estate Tax Reform: Developments and Dynamics, lists three factors that affect the ongoing environment for federal estate tax legislation:
1) a packed congressional schedule; 2) a focus on deficit reduction; and 3) the upcoming mid-term elections.
The report states that we may have a better idea of what's to come once Congress returns to session, but that the Senate may be hesitant to pass a reconciliation bill (which could include estate tax provisions) because of the recent health care reconciliation bill. If it is not included in a reconciliation bill (which requires only 51 votes), 60 votes would be necessary to pass estate tax legislation:
“The difficulty in finding 60 votes may lead to either (1) reversion in 2010 to a $1 million exemption and 55% rate or (2) a short-term extension of tax cuts, including the estate tax on a two- year basis at $3.5 million exemption and 45% rate, possibly during a lame duck session (when Congress returns after November elections).”
I'm telling my clients that (1) is a good possibility, given that that is what will happen if Congress takes no action. All those with estates over $ 1 million should run, not walk, to their estate planning attorney! A $2 million North Carolina estate could face over $600,000 in taxes.
