George Gray, Esquire's Blog

There is good news and bad news concerning the Senate’s inaction on the Federal Estate Tax in 2009. The bad news is that the confusion concerning the Estate Tax and the uncertainty it entails makes planning all the more difficult. A Columbia University professor calls it “congressional malpractice.” I don’t think anybody believes that the Congress will allow the Estate Tax “go away” for 2010; and, most think an Estate Tax in some form will be enacted in when the Congress reconvenes. At the heart of the matter is the Unified Credit Amount ($3.5mm in 2009) and the Estate Tax Rate (45% in 2009). The good news in all this mess is that the House of Representatives would make permanent the Estate Tax Rate and Unified Credit Amount at their 2009 levels and that some Senators were pushing for the Unified Credit Amount and the Estate Tax Rate to be increased to $5.0mm and 35% respectively. This bodes well that the Estate Tax will remain in a form familiar to most planners.

Currently the Estate Tax is actually paid by 5,500 Estate each year. This means that approximately 15 taxpayers will die each day who would benefit from the lapse of the Estate Tax in 2010. Some have mused if it is ethical to keep a loved one on life support until after the New Year to take advantage of Estate Tax repeal in 2010. A recent Wall Street Journal reported that one large law firm on the West Coast has actually included language in a Health Care Proxy to permit the proxy to consider “Estate Taxes” when he or she was faced with the decision to “pull the plug” on a rich loved one. Because of the “congressional malpractice”, never has the issue of when you die been more important.