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Thank You Congress, for the Motivation to Die in 2010
Thursday July 1, 2010
The unthinkable has happened. If you're an estate planning attorney, accountant, or wealthy individual, you read about 2010 being a year without estate tax when the law governing such things passed back in 2001. Yet you thought, as we all did, that Congress would make changes long in advance. After all, the 2001 law also provided for a dramatic reemergence of the estate tax in 2011, taking us back to the rules as of 2002.
With nine years to prepare new legislation, something surely would be done.
Wrong. As of now, Congress has still not passed estate tax legislation. This failure to act could lead to some incredibly sticky situations later this year. If Congress doesn't pass anything soon, we will enter an environment where very rich people would have an enormous incentive to die in December 2010 rather than live on to January 2011. Furthermore, even those with more modest estates of a bit over $1,000,000 will potentially and suddenly face the estate tax if no changes were made, with rates reaching 45%.
What can you do? Be sure your estate plan is in place and continue to monitor developments, particularly if you, or the people you love, have a net worth greater than a million dollars. Keep in mind that the net worth I refer to is everything you own, including your house, savings, retirement plan, and personal property. Most life insurance is also included, (an irrevocable life insurance trust can get it excluded) so a big insurance policy alone could get you over the million dollar amount if you are not careful, leading to a significant reduction in your planned wealth transfer.
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My estate consists of a packet of Juicy Fruit (half chewed) and a lucky rabbit's foot. Don't y'all be fighting over that now LOL. Interesting article, micharch. Thanks for sharing.
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If Congress doesn't pass anything soon, we will enter an environment where very rich people would have an enormous incentive to die in December 2010 rather than live on to January 2011.
I don't think tax rules would give anybody, rich or poor, an enormous incentive to die. The author is stretching it there a bit! Though maybe their beneficiaries would agree LOL.
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There's an article about this on WalletPop today.
Yesterday, sports-business legend George Steinbrenner died of a heart attack, at 80 years old. He leaves behind a fortune estimated by Forbes worth $1.15 billion, and landed in the list of the top 400 Richest Americans for a number of years. So long as Congress does not amend the tax retroactively, Steinbrenner's heirs will pay no federal estate tax. Had Steinbrenner lived for six more months, his estate would have paid about $632 million in federal estate tax. To put that into perspective, the projected federal estate tax for Steinbrenner's estate alone would have supported the entire Small Business Administration budget for 2009.
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Man! You sure got my attention with that headline. I say spend it all while you are alive. You can't enjoy it after you are dead. What a hoarder to amass that kind of money. How can anyone stomach being that rich with starving people in the world? I don't get it!
Thanks for the information. I plan not to die in 2010, nor 2050 for that matter. Maybe by the time I'm ready they will have figured this out.