That's assuming that Congress is unable to take action on the estate tax, when the lame-duck session convenes in mid-November. If Congress can't agree on the estate tax before the end of this year, the estate tax will be revived, and any estate that totals more than $1 million could be subject to the tax.
That means a 41 percent (and somewhat higher) tax rate for smaller estates, and estates greater than $3 million of taxable assets will be paying at a 55 percent rate. Substantially larger estates will be paying a 60 percent tax.
Why shouldn't Congress finally reach agreement on an important issue such as this? Because Congress hasn't been able to do that all year, and it is unlikely that the lame-duck session will produce anything new. We are talking about exactly the same cast of characters, right? And even if the Republicans have an enormously successful election, they won't have 60 votes in Senate next year, where House bills go to die because they can't surmount the vote level needed to prevent a filibuster.
My advice to clients these days is to include protections in your estate plan that will reduce the estate tax, such as an A-B trust, or a gifting plan, or an insurance trust, or any other means of reducing your estate. These protections might not be needed, but we'll worry about that unlikely event later.
We're getting ready for a year with a $1 million exemption, and a 55 to 60 percent tax rate. Are you?
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