CHANGES TO FEDERAL ESTATE TAX REFORM.

The 2001 Estate Tax reform has been implemented and currently allows persons to shield approximately $3,500,000 from estate tax and gift tax. If the 2001 Estate Tax reform were allowed to go forward, in 2010 the estate tax would be abolished. Congress must confirm the abolishing of estate tax this year. If Congress fails to act this year, in 2011 the estate tax will come back with the Unified Credit sheltering an estate of only $1,000,000. The Obama administration supports keeping the estate tax with a $3,500,000 Unified Credit and a 45% tax rate. The New York Times has indicated that repeal of the Estate Tax would eliminate approximately $100 billion in tax revenue. Given the size of the deficit, the elimination of estate tax may not happen. Even though the exact form of the estate tax is still quite murky I believe that a wait and see approach could be a mistake. A review will allow you to use tax-planning tools that Congress may soon curtail or eliminate.

By Bruce W. Shand, guest writer
Bruce's practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.