According to the Wall Street Journal, President-elect Obama and Congressional leaders plan to introduce legislation freezing the federal estate tax at the 2009 level. Under law passed during the Bush Administration, estates below $3.5 million were exempt from federal estate taxes during 2009. However, in 2010, the law exempted all estates for one year. Then in 2011, the exemption was scheduled to return at $1 million. According to the WSJ, the Senate Finance Committee will act within weeks to repeal the old law, freezing the exemption level at $3.5 million. Next month President-elect Obama is planning to detail his estate-tax preservation proposal in his budget.
The article provides an excellent history of the federal estate tax in the United States. This topic is certain to get continued press coverage, and generate a fierce debate. While only 2 percent of deaths result in the federal estate tax being paid, small business owners, farmers, and wealthy families have an organized effort to eliminate the tax permanently.
And stay tuned for news about whether Wisconsin will bring back its State estate tax. There has been discussion about bringing the State estate tax back as part of the effort to balance Wisconsin's budget.
What does this mean for you? If you have a net worth (and your life insurance may be included in the calculation) over $1 million you should follow developments in Madison and DC. And if you have a net worth over $3.5 million, you may want to review and update your will and or trust.