 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
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Perfectly Confusing - 2010 Estate Tax
By David Vollrath, Executive Director Union County Foundation
One task that we take very seriously here at The Union County Foundation is to encourage all people with even minimal
levels of assets to engage in intentional estate planning. Estate planning just makes good sense, but I have to
admit that based on current federal legislation (dating back to 2001) our government surely seems to be asking
us to hit a moving target. I don’t pretend to understand the lengthy process that ultimately results in the declaration
of laws and I definitely don’t understand why federal estate tax legislation has been such a low priority.
This brings us to the issue at hand, what actually is the federal estate tax for 2010? To answer this question
you must look back at the Economic and Tax Relief Reconciliation Act (ETRRA) of 2001. One of the many components
of that complex piece of legislation established the estate tax exemption amounts and the maximum federal estate
tax rates for tax years 2002 through 2011 and beyond. In general the estate tax exemption grew from $1 million
in ‘02 to $3.5 million in ‘09. This meant that if a person died in 2009 and their estate was less than the $3.5
million exemption then no federal estate tax was owed. The maximum federal estate tax rate was reduced from 50%
in ‘02 to 45% in ‘09. But here is the really quirky part of the ETRRA legislation of 2001, and for the life of
me I have no idea why such a provision was included. The legislation calls for a total repeal of federal estate
tax in 2010. In other words if you die in 2010, regardless of the amount of your estate, according to current legislation
there is no estate tax due. The 2001 Tax Relief Reconciliation Act further calls for a $1 million estate exemption
for 2011 and beyond, with a maximum estate tax rate of 55%. Apparently back in ‘01 when this legislation was written,
the legislators couldn’t imagine we ever would actually someday reach 2010. Lo and behold here it is nearly February
of that once incomprehensible year of 2010 and the legislation has never been changed or addressed!
What realistically should we expect might occur regarding federal estate tax for 2010? The House of Representatives
has already passed a bill to permanently extend the 2009 estate tax provisions of $3.5 million exception and a
45% top rate. The Senate has not, and likely will not approve the House version of the legislation. The reality
is that it could be many months before final legislation is approved by both houses of Congress. An additional
reality is that we shouldn’t expect that the estate tax is going away for 2010. Most likely legislation will be
passed and made effective retroactive back to January 1, 2010, even though traditionally legislation becomes law
as of the actual date of passage. It is however remotely possible that with the inefficiencies of government, our
legislators could fail to take action and estate taxes really could be repealed for 2010. On the other hand we
all know that death and taxes are certainties, and history teaches us that we have every reason to believe they
will continue to be inexorably linked….even in 2010.
The Union County Foundation encourages you to work with your professional advisors as you consider your present
and future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving
and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable
choices. Please call us at 937-642-9618, email info@unioncountyfoundation.org,
or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... "preserve your
footprint in time." |
