With the passage of the Tax Relief, Unemployment InsuranceReauthorization and Job Cration Act last December, many believed that we would have some certainty about the estate and gift tax for at least a couple of years.
The new law sets the estate tax at 35 percent for individual estates valued at over $5 million for 2011 and 2012. The new law also reunified the federal estate and gift taxes for gifts made after December 31, 2010 so that the gift tax exemption and maximum tax rate is equal to the estate tax exemption and maximum estate tax rate. The new law also created a concept known as portability which allows spouses to use each others estate gift and tax exemption. after death.
After 2012, the law changes unless Congress acts so we don't have certainty after 2012.
But at least we have some certainty for 2011 and 2012.
Well ... maybe maybe not.
Because of the state of the economy, many are suggesting that the new law be changed and the tax rate increased or the exemption amount reduced. Recently, there have been rumors that the congressional “super committee” tasked with creating a plan to reduce the national debt over the next 10 years, may recommend reducing the $5 million estate, gift, and generation-skipping transfer tax exemption in an effort to raise revenue.
These rumors are unsubstantiated, but we’ll learn if there’s any truth to them soon enough. The super committee’s report is due to Congress on November 23, 2011.