A few weeks back, Mitch Album, the well known columnist for the Detroit Free Press, wrote an interesting article about death and taxes. The article follows the effects of the death of George Steinbrenner and the New York Yankees.
The article examined the benefit of passing away this year. Unknown to most people, is that the federal government, repealed the estate tax for one year and one year only.
Prior to 2010, the federal estate tax exemption steadily increased from one million dollars to three and a half million dollars as part of the taxpayer relief act of 2000. The idea was to increase the estate tax exemption over time to mirror inflation and the growth of the middle class, with an end result of repealing the estate tax altogether for the year 2010.
Ultimately, the thought was that Congress would enact new legislation that would prevent the estate tax from being repealed in 2010. Such legislation never happened. And the end result is, this year; and this year only, there is no estate tax. However, after this year and beginning January 1, 2011, the estate tax returns with a much lower exemption in the amount of one million dollars. Although there is discussion of a “fix” being passed through Congress, there is no immediate relief within sight. Therefore, if you have any questions regarding your potential exposure to the estate tax, please call us.