Carnac the Magnificent Predicts the Estate Tax
Money Matters Radio – Estate Planning Checklist
By: Martin M. Shenkman, Esq.
Introduction/Overview: Since our Ouija board hasn’t faired well in predicting what would be with the estate tax, we’ve brought in the famed Carnac the Magnificent to shed some spiritual light on the situation. Consider the following items?
√ Congress has been stalemated: For years Congress has been unable to push through a meaningful and comprehensive estate package, will they be able to get their act together? Carnac is not confident.
√ Big Bucks: We’re not talking chump change. Try this on for size:
- To extend for 2 years is $18 billion.
- For 10 years to use 2009 system as compared to $1M $253 billion cost.
- Indexing the estate tax exemption would increase cost over 10 years to $273 billion.
Carnac was actually puzzled why we would impose on his magnificent bank of wisdom inquiring why Congress won’t provide the $3.5 million inflation indexed estate tax exclusion and the 35% rate talked about. Carnac thinks it’s pretty obvious that with budget deficits growing at dizzying rates that Congress cannot give out such a huge tax benefit.
√ Politics: Politics ………… Carnac is not confident with oil spewing in the Gulf and so much going on that Congress will move on the estate tax quickly. It is also too late in the year to make the estate tax retroactive to January. If Congress sets an estate tax exclusion less than 2009’s $3.5 million level it will look like a tax increase which may not be politically palatable. But what if Congress does nothing (gee Congress doing nothing!)? Next year we automatically get a $1 million exclusion and 55% rate. If the goose that up to $2 million and drop the rate to 45% all the folks in Washington can tell their constituents that they passed a tax reduction!
√ Carnac’s best guess: At this stage, nothing may happen until several months into 2011 and then we may just get an exclusion of $1-$3 million with no inflation indexing and a rate of 45-55%.
√ Carnac’s Warning: Jack Kevorkian was just released. Rumor has it he is going into tax planning. If you’re taking Geritol or Centrum Silver, you might want to watch your back and hire a food taster as 2010 draws to a close.
