Unless Congress gives us a last minute reprieve, the Federal Estate Tax will revert to the rates in effect on January 1, 2001.  This means that any estate greater than $1,000,000 will be taxable at 41%, while estates worth more than $3,000,000 will be taxed at 55%.  Estates greater than $10,000,000 will incur an additional surcharge of 5%.

There has been a lot of talk recently about the Bush Tax cuts and whether or not they should be extended.  Most of the rhetoric in Washington has been focused on income tax.  However, the Estate Tax was reduced as a part of those cuts, so if nothing is done in Congress, they will revert back to these pre-2001 levels on January 1, 2011.  Many experts had expected the dust to settle on the issue by now, so there is still a lot of uncertainty as to what action, if any, Congress will take prior to January 1st.

Joint Survivor life insurance plays a crucial role in estate planning, as it provides the heirs of a large estate with a means of paying estate taxes without the need for liquidating hard-earned family assets.  Many of our clients have been taking a wait-and-see attitude, as they want to see what Congress will do first.  Needless to say, it makes planning extremely difficult.