Estate Tax Being Repealed—So What?

Many people have already assumed that the estate tax will disappear. BEWARE, this is probably an incorrect assumption. Below I explain why the estate tax will most likely be with us for many years:

• Ever hear of the flat income tax? How many years has Congress been talking about that? (My entire life). Remember that Congress is big on talk, little on action. On the next hot day, remember that most of the hot air comes from Washington . No laws have been changed, just talk and some voting, which doesn’t count.
• So what if they change the law this year, do you think Congress can’t change it back? We’ll have a new president and a new Congress in 4 years. Those new folks get to rewrite the tax rules again, as they commonly do. Remember when the capital gain rate was 20%, then 28% then back to 20% and the holding period was 12 months, then 18 months then back to 12 months? Congress made those changes all within 3 years. Do you think you can count on anything they do as permanent?
• Less than 4% of the US population pays estate tax. It’s an easy target for the politicians because few people are effected. And it's an easy tax to assess because dead people don’t vote.

Also keep in mind that even if estate taxes disappear temporarily, your capital gains taxes could rise. If there is no estate tax, there’s no reason for a “step up in basis.” With no step-up in basis, investors could pay capital gains taxes at death (which they currently do not).

Bottom line; If you plan your estate well, you cannot be caught off guard. If you wait for Congress and get hit by a bus tomorrow, your family may owe a ton of money. Which strategy seems wisest to you? To get your affairs in order, or gamble with your assets?

If you are single with an estate over $1 million or married with an estate over $2 million, you can take advantage of a free hour estate review. Bring in your trust and list of assets to learn how you can protect what you worked hard to accumulate.