Estate Planning and New Estate Tax Laws

There are three estate tax bills on the table and each one makes  you feel like why bother trying to get wealthy if they are going to take it away when I die.

First there is S.722 which is introduced by Sen. Max Baucus, D-Mont., Chairman of the Senate Finance Committe which proposes a freeze on the estate tax exclusion rate at 2009 ($3.5 million per person). S.722 also provides for reunification of the estate and gift tax credit (use $3.5 towards estate or gift tax) and is indexed for inflation.

Also in the House is H.R. 2032, sponsored by Rep. McDermott, D-Wash., who would like to make the estate tax exemption permanent at $2million per person ($4mil for husband and wife) and index for inflation with progressive estate tax rates of 45% for estates valued between $2 million and $5 million; 50% for estates at $5 million to $10 million; and 55% for estates valued over $10 million…makes you want to go out right now and make over $10 million so you can give 55% back to a government that can’t balance its budget and just put a couple trillion worth of bailout money on the equivalent of a credit card.

Finally, there is Bill H. R. 436 which is introduced by yet another Democrat Rep. Earl Pomeroy, D-N.D. and it would freeze the exclusion at 2009 level (same as above) and reunify the estate and gift tax. However, this nasty pernicious Bill would wack out the opportunities found with Family Limited Parnterships (FLIPs) which is valuation discounts so you can remove highly appreciated assets out of your estate.

You need to contact your representatives and give them a piece of your mind before they rule on some of the most anti-wealth legislation in recent years punishing those who do well and want to leave a legacy for their family or charity.

In order to protect your assets there is a new form of asset protection which is protection against adverse legislation. Every American’s retirement hangs in the balance especially if you have a large IRA that would run afoul of these potential laws.

Untaxingly,

James Burns, Esq.