No Hurry Is There?

Don't expect any action by Congress on the federal estate tax before mid-November. There are still several appropriations bills to take care of, and Senate Majority Leader Harry Reid also wants to bring up an immigration bill. Those topics should take care of the Senate's free time between now and Oct. 11, when the election recess starts.

What will happen in November? If the Republicans win big, we can expect that they will want to wait until January to discuss tax law. But that means that the $1 million exemption for the estate tax will return on January 1, and could affect the estate of every decedent with a net worth of more than that amount until a bill is passed (although it could be retroactive to January 1.)

If the Democrats win or at least hold their own, a stalemate on taxes is a possibility because that is exactly what happened last year. On Dec. 20 the House passed a bill that extended the $3.5 million exemption, but the Senate went home for the holidays without taking action. Democrats in the Senate don't have 60 votes on this issue, and if no action is taken, the Bush tax cuts expire and we're back to a $1 million exemption.

Either way the results don't look good, and if you have an estate that is greater than $1 million for single persons or $2 million for married couples, you should start thinking about revising your estate plan to avoid the tax.