More on the Estate Tax: Congress Incentivizing Death?

3:00 pm Uncategorized

Last weekend, the Wall Street Journal had a prescient article entitled, “Too Rich to Live?” Three days later, another billionaire – Yankees owner George Steinbrenner – died at age 80, taking the 2010 billionaire death tally to three (Dan Duncan and Walter Shorenstein being the other two who passed in this, the year of no estate taxes).

Tax historian Joseph Thorndike was quoted as saying that there is a “death incentive” every time Congress raises the estate tax, but with the potential estate tax “re-set” next year to a top rate of 55 percent and only a $1 million deduction, 2011 could see the largest increase in a major tax in history – and a potential escalating number of “gruesome” cases as the clock runs out on 2010.

Many estate planning advisers are telling clients to look carefully at their powers of attorney documents this year, and to also pay close attention to their health care proxies.

The WSJ article said that many Washington insiders think that Congress will not act this year because of an already crowded legislative agenda and the fall election.

The Senate is currently divided between three possible solutions – the pre-Bush rate of 55 percent, a 35 percent rate with a more generous exemption and a return to the old 45 percent rate and $3.5 million exemption per individual.

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