Will the Federal Government Produce a New Federal Estate Tax Law On Time?

Will Congress provide a new law before the end of 2009? If not, there will be a lot of uncertainty in the taxation of decedent estates. In June 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act including the Estate Tax Repeal. The current law is set to expire on December 31, 2009.

No one has a crystal ball, but we are told to expect the lifetime Federal Estate Tax credit will be frozen at $3,500,000.00. The marginal tax rate over the credit amount will be set at 45%. There is a promise to “index” the credit amount for years beginning in 2011. The “step up in basis” rules for capital assets should be preserved. Although this is good news, Congress may not act on time and maybe the congressional intervention will add a few new wrinkles. We will just have to wait and see.

At Powers Chapman, we are here to help. We intend to keep our estate planning clients informed and up-to-date. Review your existing estate plan to make sure it provides for maximum flexibility and benefit under any potential future scenarios or if you would like to devise an appropriate estate plan, please contact Powers, Chapman, DeAgostino, Meyers & Milia, P.C.