New Estate Tax Laws

By: Robert Harris

 Recently there has been congressional movement on the issue of the estate tax. The "Responsible Estate Tax Act, Senate Bill 3533." Has been introduced to the Senate.  In the United States House of Representatives, the "Responsible Estate Tax Act, House Bill 5764.", identical to the Senate bill, was introduced. The bills, in their present form, would provide a $3.5 million exemption per individual, with a progressive rate structure. The top rate would be 55 percent, and there would be a 10 percent surtax on billionaires. Here’s the bullet point press release from the sponsors. They say these bills would

•Exempt the first $3.5 million of an estate from federal taxation ($7 million for couples). This represents the same exemption that existed in 2009. This would mean that 99.75 percent of all estates would be exempted from the federal estate tax in 2011 alone.

•Include a progressive rate structure so that the very wealthy pay more. The rate for the value of the estate above $3.5 million and below $10 million would be 45 percent, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50 percent, and the rate on the value of estates above $50 million would be 55 percent.

•Impose  a 10 percent surtax on the value of an estate above $500 million ($1 billion for couples).

•Close all of the estate and gift tax loopholes requested in President Obama's fiscal year 2011 budget. Estimates have been provided that closing these loopholes that benefit the very wealthy would raise at least $23.7 billion in revenue over 10 years.

•Protect family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to by $1 million for estate tax purposes under § 2032(a) (Special Use Valuation). The proposed bill increases this level to $3 million and indexes it to inflation.

•Benefit farmers and other landowners by providing estate tax relief for conservation easements.

On thing to remember is that these laws not only effect probates, but they will effect how your lawyer constructs your estate plan. Its important that he or she is aware of these new proposals, and what will eventually become law, since it will effect how you set up your estate plan, or modify what you already have.

For 2010, the estate of anyone who died during 2010 is not taxed even one penny. But can this law, if passed be made retroactive to January 1, 2010? We’ll find out, as Texas billionaire Dan Duncan who passed away recently, will definitely be a test case. There are estimates that had Mr. Duncan passed away last year, the Duncan estate would owe taxes of between $4 billion and $5 billion. According to multiple news sources, Mr. Duncan's heirs have vowed to mount a legal case to oppose any efforts to make an estate tax retroactive.

If your in Oregon and need to establish your estate plan, or wish to review an existing plan for modification, please contact us.

Rob Harris

Attorney at Law

 

Comments

[Small Business Bankruptcy]

I just hope this law would alleviate the poor and the taxes would be use properly.