Got a Plan?

Congress has made several attempts to change or even eliminate the estate tax. So far, no agreement on what to do has been reached, and in this presidential election year, the issue has been put on the back burner. So where does that leave estate taxes and your tax planning?

Currently up to $2 million of any individual's estate is exempt from tax. Above that amount, a top tax rate of 45% applies. The exemption will increase to $3.5 million in 2009, and in 2010 there will be no estate tax. But for that year only. Unless Congress acts, rates and exemptions are scheduled to revert to 2001 levels beginning in 2011.

It's impossible to predict whether Congress will let that happen. A relaxation of the rules rather than outright repeal of the estate tax may be a compromise that could be agreed upon. One recent proposal called for raising the exemption amount to $5 million for an individual and $10 million for a married couple.

The uncertainty over estate tax legislation is not an excuse to avoid planning. All adults should have basic estate planning documents, regardless of their age or the size of their estate. Essential documents include a will or trust, medical directives, and guardianship documents for minor children.

For assistance with your planning, give our office a call.