Not sure how to demonstrate SILENCE but go back and re-read the title of this post and then pretend you are sitting in the cone of silence from the TV show (no, not the movie) Get Smart. Oh boy, not the movie! That thing was painfully bad. The silence of the cone of silence (or crickets chirpping during every bombed joke of the Get Smart movie) is what we are hearing, or not hearing, right now on the estate tax law front. The longer this year goes on the closer we are to January 1, 2011. The closer we are to January 1, 2011 the closer we are to going back to a one million dollar exemption.
Who would have thought this possible? A historic economic situation has created the possibility that we could go back to the one million dollar exemption on death transfers. The “death tax” as many people know it is a hard hitting tax (up to 55%) that many people had put out of their minds as the exemption grew to $2,000,000, then $3,500,000, and now it’s unlimited. The way it’s looking though that exemption could be going back to one million dollars on January 1, 2011. You better put it back in the front of your mind!
The uncertainty with estate taxes has made it so everybody, especially high net worth people, should have their estate plans reviewed. In particular the laws are very uncertain TODAY and you should have your trust reviewed by an expert if you have a potentially taxable estate. Additionally, make sure the ownership of your life insurance is reviewed by an attorney or Certified Life Underwriter (CLU) to make sure you have not created any adverse tax situation with your life insurance.
I could keep blogging for 5 pages and not come up with the answer becuse I do not know what the new law will be or when it will be decided. However, I do know that people should take this uncertainty very serious. A 55% tax is no joke and, don’t forget, it includes most all of your assets including: your artwork, your 401k, your IRA and (yes really) your life insurance!
Just because the people in DC can’t figure out what to do doesn’t mean you shouldn’t. Go talk to your estate planning attorney! If you don’t have one call me! -John