March Madness: brackets, teams on the bubble, last second shots. Right? Yes, but how about the madness facing individuals who are currently planning their estates in the face of Congress’ inaction on the estate tax law. Those who have followed this debacle know there currently is no federal estate tax; that Congress could reintroduce the estate tax this year, perhaps retroactively; and if Congress fails to act in 2010, in 2011 the amount individuals can protect from a maximum 55% death tax rate will be only $1 million.
This is also "March Madness," or "March Sadness." Tax attorneys and financial planners are struggling to advise clients how to plan with this death tax uncertainty. However, the impossibility of predicting the death tax future should not obscure the need to address fundamental planning needs. The Alley Oop Dunk will make Sports Center, but the team making its free throws and the extra pass will win. Here are some fundamental objectives individuals need to address, whether or not there will be estate tax to pay:
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Guardians for minor children.
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Spouses from second (or third) marriages.
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Assets passing to children.
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Probate avoidance.
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Asset Titling and Beneficiary Designations.
Congress’ inaction on the estate tax issue has been far from a legislative "One Shining Moment." Hopefully Congress will focus on estate tax issues this year and provide some permanence prior to 2011 and a $1 million exemption amount. But with or without Congress, individuals should ensure that their fundamental estate planning objectives are met.
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