Estate of Confusion: Estate Tax Aspects of Obama's Tax Deal with the Republicans

By now, most everyone knows that Obama has reached a tentative deal with the Republicans to extend the Bush tax cuts for two more years.  From an estate tax standpoint, this deal is extremely generous to taxpayers.  Under the deal, the estate tax exemption would be $5 million for each individual, and $10 million for couples.  In addition, the applicable estate tax rate would be 35%.  However, the proposed legislation's terms would expire in 2012, just in time for the next presidential election.

Not surprisingly, Obama has received a lot of criticism from the Democrats for what is perceived as a tax cut that will only benefit the extremely wealthy. Even for those who support lowering the estate tax, however, this deal cannot be viewed as an overwhelming victory.  The proposed legislation's 2012 sunset provision signals continuing uncertainty for taxpayers, making it impossible for them to effectively plan their business and financial affairs.

To learn more about the near "full scale rebellion" which the deal has sparked within the Democratic party, follow this link to a recent Boston Globe article:  "Obama chides Democrats, calls tax deal unavoidable".  Also, if you would like to keep up to date with all of the new estate tax developments, visit the "Future of the Federal Estate Tax" blog.  As always, if you have any questions or you would like to share your point of view please do not hesitate to leave a comment or contact me directly.