Author(s): Ann Stuursma, Tara Velting

In the early years of the first Bush Administration, Congress passed a series of tax relief measures which included a progressive loosening ofthe estate tax laws, At the time that these laws were passed, the “exemption amount”, the amount which one person could leave to his or her heirs without having to be concerned about imposition of Federal estate taxes, was $675.000. According to the new schedule that is currently in place, the following will happen in
the next three years:

  • In 2009, the exemption amount will be $3,5 million per person,
  • In 2010, the estate tax will be repealed in its entirety. Persons dying in 2010 will be able to leave an unlimited amount to their intended heirs, free of any concern for estate taxes,
  • In 2011, the entire law will “sunset”, and the estate tax will be restored, with a $1 million per person exemption amount.

At each level, by the use of carefully crafted and properly funded credit shelter trusts, the applicable per person exemption amounts can be doubted for a married couple.

We believe that it is most likely that the one—year hiatus for 2010 will be repealed and that the estate tax will be made permanent with a per person exemption amount higher than the $1 million amount scheduled to go into effect in 2011. lt appears that Barack Obama would support an extension otthe $3,5 million per person amount, and a 45% estate tax rate on amounts above that figure We recommend that our clients monitor Congress as it addresses these issues in 2009 and consult us as needed for further consultation and planning.

For more information, contact Ann Stuursma and Tara Velting.