Posted by: Heinz Brisske
Rumors have been widespread that the Super Committee is considering cutting back the estate and gift tax exemptions from it’s current $5 million exemption to $1 million, and increasing the effective estate tax rate from 35% to a maximum 55% effective immediately. Those rumors, in fact, have gone viral, and no one is quite sure of their origin. Are the rumors based on fact or fancy?
According to various estate planning professionals, there is no substantiation for those rumors. Yet commentators still remember with dismay when Congress allowed the estate tax to lapse for 2010, a move few thought would actually occur. Because no one really knows what Congress is likely to do, most estate planners will help their clients avoid risk by recommending that gifts be made as soon as possible, if gifting is in the clients’ plans.
House Ways & Means member, Jim McDermott (D., Wash.) recently introduced a bill to reduce the gift and estate tax exemption to $1 million per individual, with a 55% maximum rate, in 2013. His proposal would preserve portability, or the ability of a surviving spouse to claim the predeceased spouse’s unused exemption. At thte same time, some Republican proposals would repeal the estate tax altogether. Despite these proposals, many believe that Congress won’t address the gift and estate tax issue until after the 2012 election.