|
|
Judith A. Wright |
|
|
Judith A. Wright |
|
|
||
|
|
About Our Services |
The need for tax planning continues because the “repeal” is a slow phase-out plan stretching over the years and is temporary. the taxpayers were informed that there was a projected surplus of $5.5 trillion over the next decade. The candidates and political parties differed over how to handle the surplus. The Republican platform centered on returning the surplus to the taxpayers through tax-cut legislation, and President Bush made good on this promise through the Economic Growth and Tax Recovery Reconciliation Act of 2001 (EGTRRA). A part of this Act is the elimination of federal estate taxes. However, the estate tax elimination is accomplished through a phase-out that requires continued tax planning through the phase-out period, and the estate tax repeal lasts for only one year. While President Bush continues to push to make the repeal permanent, Congress has not been able to muster sufficient support. The estate tax “repeal” is a very slow phase-out leaving most of the estate tax in place until 2010. The repeal then expires on December 31, 2010, returning the estate tax to the standard established under the Taxpayer Relief Act of 1997. In other words, full repeal is in effect for only one year. Consequently, planners are left in a quandary with respect to what impact estate taxes will have. While estate tax rates are the highest in our taxing system, the rate drops by only 10% through the phase-out, from 55% to 45%. Taxpayers get added benefit by the increase in the exemption during the phase-out, but the exemption returns to $1 million in 2011. Therefore, until Congress enacts final legislation or the tax repeal expires at the end of 2010, we must continue to watch the Democrats and Republicans play with this political football. Republicans, through President Bush, want to make the repeal permanent, while the Democrats want many of the Bush tax cuts repealed. Tax planning continues to be needed until 2010, and it may be required thereafter. As a result, planning with flexibility is key and planning with trusts maximizes the flexibility of the plan. |
Estate Planning
|
||
|
DISCLAIMER |
||
|
|
||
