We are already into the eight month of 2010 and no estate tax law has been passed.  Since January 1, 2010 there has been NO estate tax.  No matter how large or small your estate, no matter who you left it to or how, there is NO estate tax due so far during 2010.  Rumor has it that the Democrats want to put in a tax on estates and make it retroactive to January 1st but there is resistance.  If our lawmakers do nothing before year end, the estate tax laws go back to $1,000,000 that can escape taxes (from $3,500,000 in 2009) with a 55% tax rate (versus 35% currently).

While I don’t know of any instances in Rome, GA, can you imagine for someone in bad health with an estate over $3,500,000, that an enterprising (take your pick) spouse, children, adopted children, nieces and nephews, brothers or sisters that might inherit assets keeping some poor soul alive on life support through 2009 so they made it to 2010 to save estate taxes?

The other side of that coin is even worse; that some enterprising potential beneficiary might want to make sure the asset owner EXPIRES in 2010 while there is still no estate tax.  A recent news article said that by dying in 2010, George Steinbrenner saved billions in taxes.  People have been killed for a lot less!  Did the law makers foresee these issues? Or course not!  They can barely see past the next election.

This year the television show LAW & ORDER had one show that looked at a case that involved the early demise of a wealthy person.  But estate plans and avoiding estate taxes are not sexy, glitzy or sinister normally.  I don’t think the nation’s law makers planned on these weird consequences, but I don’t think they are really concerned about them either.

The attorneys, CPA’s, insurance professional and estate settlers like me do not make the laws.  We do use whatever is enacted to the best advantage of our clients.  We know the law will change soon; we do not know exactly how yet but we’ll stay abreast of the changes so we can give you appropriate advice.

I’ve been working with clients on estate planning since 1973.  I don’t recall any time during those 37 years when it was more appropriate to say to clients and prospects, “Now is the time when you need to have your will reviewed.” Come see us and let us look at your current will and talk about your estate plans.  It will not cost you anything and we might find something that will benefit you and your family.

As I mentioned earlier, there is NO estate tax if you die in 2010.  Any volunteers?  If our lawmakers do not enact a new law before year end (and it seems unlikely), then in 2011, the amount of assets that can be excluded from estate taxes becomes $1,000,000.  Also, the stepped up cost basis to date of death values goes away, the surviving spouse can exclude gains on $3,000,000 when assets are sold; other beneficiaries can exclude only $1,300,000 gains (total for all beneficiaries other than spouse) on sold inherited assets.  And the tax rate goes to 55%.

There was a bipartisan proposal to exclude $3,500,000 in assets and have a 45% tax rate, with stepped up date of death cost basis.  The plan called for (over several years) the exclusion amount to rise to $5,000,000 and the tax rate to drop to 35%.  Senate Democrats blocked that plan in the third week of July.

So come and talk to us.  We’ll know the up to date situation and can help you avoid estate taxes if that is your goal (and it is for 75% of those that I talk to) or we can help you get your assets to those you want to benefit, even if you are not concerned with estate taxes.


Roger W. Goss
Senior Vice President – Trust