The Obama administration has just released its forecast for this year’s budget deficit: a record-breaking $1.56 trillion. Who knows where it all ends and how it gets paid for. I suspect the only way will be through debasement of the currency, but who knows. In any event, the repeal of the estate tax is probably short-lived and will die a natural death no later than December 31, 2010, just about eleven months from now.
One can’t help but believe the current administration may be satisfied to let the clock run out on estate tax repeal this coming New Year’s Eve, with an estate tax reset to the year 2001 when the estate tax exemption was $1 million (compared with $3.5 million for last year) and a top estate tax rate of 55%. So much for longing for the good old days.
There are some great planning opportunities to take advantage of before the clock runs out on 2010. If you have an estate greater than $1 million and you are single or if your estate is greater than $2 million and you are married, you may want to consider some planning this year which will take advantage of the current favorable tax structure, including the very low 35% gift tax rate (which translates into a 25% estate tax rate due to the way gift taxes are excluded from the estate in most cases whereas estate taxes are not deducted from the estate), the continued viability of valuation discounts for gifts of non-marketable family LLC’s and partnerships, and the fact that your assets are at historically low valuations right now.
-Attorney Mark Dodds