Broker Check

Boca Raton Office

1001 W. Yamato Rd

Suite 306
Boca Raton, FL 33431


Winter 2009

The Wall Street Journal reported January 12th that President-elect Obama and Congressional leaders intend to maintain the estate tax rather than let it expire on schedule in 2010. Democrats are expected to act quickly to prevent the estate tax’s scheduled repeal.

As you’ll recall from 2001, rather than repeal the estate tax immediately, Republicans settled for a 10-year phase-out that eliminates the tax only for a single year. Then the rate goes all the way back in 2011 to the confiscatory 55% rate of the Clinton era, with a mere $1 million exclusion.

Mr. Obama wants to make the current estate tax rate of 45% permanent, along with an exclusion of $3.5 million ($7 million for couples). According to The Journal, “family-run” businesses and farms particularly feel the pinch of the estate tax, because they are less likely to have the liquid resources needed to meet their estate tax liabilities. Interestingly, the latest Joint Economic Committee (JEC) estimate is that the death tax has reduced the stock capital in the economy by about $847 billion which coincidentally is about the same amount of capital needed to spend and/or borrow under our latest economic stimulus plan.

While this statistic alone is cause for repealing the estate tax, it appears highly unlikely that our Democratic-controlled Congress will give such a large tax break to the wealthy during these challenging economic times. Fortunately there is a plethora of estate planning tools and techniques, especially in today’s low interest rate environment, that can help clients plan for this tax. In addition, don’t overlook these enhancements to your basic estate planning as of the new year:

  1. The gift tax annual exclusion increased from $12,000 ($24,000 for couples) in 2008 to $13,000 ($26,000 for couples) in 2009. It is best to make annual gifts early in the year.


  2. With proper planning, both spouses can utilize their federal estate tax exemption which went from $2 million ($4 million for couples) in 2008 to $3.5 million ($7 million for couples) in 2009. This means it’s now more important than ever to consult with your attorney to review your trusts.

Any tax advice contained herein is of a general nature. Please seek specific tax advice from your tax professional before pursuing any idea contemplated herein.