President Obama hoped Congress would pass health care reform before the August recess. However, it will now be considered in the fall. Does this portend a similar delay in estate tax legislation?
Much has been written about the need for estate tax legislation to add "permanence" to the law, which now affects primarily decedents with estates exceeding $3.5 million. Current law provides that, in 2010, there is no estate tax and in 2011 forward only $1 million of assets can be protected from estate tax. These two extreme differences add to the uncertainty in estate planning. Most agree that Congress will at least extend the $3.5 million exemption for one year to avoid the elimination of the estate tax in 2010. Obama is on record supporting a $3.5 million exemption. (By the way, there are also proposals for other estate tax changes that I have previously written about. These pertain to GRATs and family discounting.)
However, what if legislative proposals deemed more important (e.g., health care) bogs down in Congress and estate tax reform is pushed aside? Commentators do not expect this calamity to result but one tax lobbyist has told me he would not be surprised if no estate tax law is passed. In the absence of legislation, 2010 becomes the year to die for estate tax purposes. Stay tuned.