Is Certainty Coming to the Federal Estate Tax?
The White House was somewhat vague about its intentions regarding the federal estate tax following the State of the Union address. One comment suggested that the Administration wasn’t going to touch the estate tax, leading to a considerable amount of speculation over what that comment actually means. Would it allow the estate tax rate and exemption level to revert to 2001 levels? Or would that mean leaving the current $5.12 million exemption and 35% rate in place? Obviously, there is a huge difference between the two options, so some clarity was needed.
That clarity (at least for the moment) has arrived with the release of the proposed FY 2013 federal budget. The Administration’s budget proposal with respect to the federal estate tax is to restore the $3.5 million exemption and 45% rate that were in effect in 2009. This would appear to be a sensible compromise between the current law and the 2001 law, but my enthusiasm for such a common-sense decision is tempered by the knowledge that this proposal actually has to make it through Congress. Does the phrase “one-car funeral” come to mind? Let’s keep our fingers crossed that Congress will allow us to plan without constantly dealing with moving targets.
In the meantime, keep in mind that the State of Maryland continues to stand by its $1 million estate tax exemption and doesn’t appear to have any intention of raising it. As I always say, at least Maryland gives us a fixed target…