Dying to save on taxes?
CNN Money reports today on the estate tax, currently 'on hold', which is set to return with a vengeance on midnight, Jan 1.
The roots go back to 2001, when Congress cut the estate tax rate to 45% from 55% and increased the exemption gradually over a decade. From its 2001 level of $675,000, the exemption rose to $3.5 million per individual by 2009.
Thanks to legislative sausage making, the rules got extreme after that: The tax disappeared altogether in 2010, but was programmed to revert in 2011 to a $1 million exemption with a top 55% rate.
Everyone's hoping that Congress will go back and review the law before the end of the year, but they aren't optimistic:
Many Washington insiders are betting Congress won't act this year because of an overflowing to-do list, the fall election and fewer than 40 working days left in 2010.
On the other hand, looking at the law may be a good way to score some extra votes...
What does this mean to you? Look at your options when it comes to leaving your assets behind - you want to gift your assets early on. It's a morbid thought, but it may be well worth it if you pass away after 12:01 am.
