After years of campaigning, each Party appears to have chosen their presidential candidate, with the summer conventions a formality to a McCain/Obama match. Whether these two candidates square off, or Clinton somehow captures the Democrat nomination, the election holds special interest for estate planning professionals and their clients.
Currently, Federal estates exceeding $2 million are subject to estate tax. In 2010, the Federal estate tax disappears, but only for one year. Beginning in 2011, the estate tax returns with a vengeance, taxing estates over $1 million dollars at maximum rates of 55 percent. If you are reading this twice thinking it makes no sense, try explaining it to incredulous clients attempting to plan for their families and future generations. Although an educated guess is that the next President and Congress will step in and "permanently" fix the problem in 2009 (when the exemption amount is $3.5 million for one year), the only certainty is that, if they can’t agree, $1 million is the protected amount starting in 2011.
Thus, back to the November election: as we patiently wait to see who is elected, the most significant impact for many voters and their families may not be the election’s effect on Iraq, gas or food prices, or Supreme Court nominations. Rather, it could be whether, upon death, 55 cents of every dollar goes to pay estate tax, or whether the next President and Congress join to provide a sensible solution to the problem they created during President Bush’s first term.