Estate Tax Proposal Update

10:42 am Uncategorized

According to an article in last Friday’s Wall Street Journal, the latest estate tax plan proposal in the U.S. Senate from Vermont Sen. Bernie Sanders would reinstitute the 2009 estate tax level — $3.5 million exemption for individuals and as much as $7 million for a couple – of 45%.  But estates with taxable assets valued at $10-$50 million would pay a 50% estate tax, those about $50 million would be hit with a 55% estate tax and those with taxable assets above $500 million would pay up to 65%.

The Sanders proposal is co-sponsored by Democrat Senators Tom Harkin of Iowa, Sherrod Brown of Ohio and Sheldon Whitehouse of Rhode Island.  The proposal also would make the new rates retroactive to Jan. 1, 2010.

In addition, the Sanders proposal would require a minimum term of 10 years for Grantor Retained Annuity Trusts and would also make some rules changes regarding valuations and discounts used in gift and estate planning.

The estate tax proposal sponsored in May by Senators Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) proposes a 44% estate tax rate beginning in 2011 after an individual exemption of $3.5 million.  After 10 years, the rate would go to 35% after an individual exemption of $5 million.

If lawmakers fail to reach agreement on a new estate tax plan, the tax rate in 2011 will be 55% on estates above approximately $1.2 million.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

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