By Cameron M. Morby, Associate–
Even a Red Sox fan will appreciate the impeccable timing of George Steinbrenner’s death, which occurred on July 13, 2010. Steinbrenner, joins a growing list of billionaires including natural gas mogul Dan L. Duncan ($9 billion) and real estate tycoon Walter Shorenstein ($1.1 billion) whose timely deaths (for estate tax purposes) have resulted in hundreds of millions dollars in tax savings for their heirs while costing the federal government hundreds of millions of dollars in revenue.
The current estate tax dilemma was set in motion in 2001 when Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) which provided for a one-year repeal of the estate tax for 2010. When EGTRRA was first enacted most estate tax planning professionals believed Congress would enact legislation to prevent the predicament created by EGTRRA’s repeal of the estate tax during 2010. However, with 2010 more than half way complete and guaranteed litigation with any attempt to pass retroactive legislation, wealthy estates like the Steinbrenners and Duncans and others will continue to reap the benefits of the estate tax repeal.
A more devastating result will likely affect more individuals and estates in the coming years if currently scheduled estate tax exemptions and rates remain unchanged. In 2011, estate tax exemption amounts will be limited to $1 million per person and have top rates equal to 55%, however, most experts predict that Congress will reinstate 2009 estate tax exemption levels to $3.5 million for each individual and $7 million for married couples and implement rates of 45%. In an election year and with numerous pressing issues keeping Congress preoccupied, it is difficult to predict when and if Congress will take action and reform the estate tax laws. One thing is certain: Congress will act. The question is how soon.
Whether your estate is worth $10,000 or $10,000,000, we at Snow Jensen & Reece would like to help prepare you for your final innings in the great game of life. Give us a call today.