I am sure that you know the story of the other shoe A man returned late at night ot his boarding house, sat on the edge of the bed, and took off one shoe and dropped it on the floor. Remembering that there were people about, he carefully put the other shoe down on the floor without creating a noise.
Soon came a voice form the room on a lower floor, "I have been waiting for the other shoe to drop. Hurry up and drop it so I can go to sleep." Many of us have been waiting for Congress to drop the other shoe.
Nine years ago Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001, otherwise known as "EGTRRA." For some reason which so far has escaped me, Congress tends to pass tax laws the initials of which form acronyms that area easily pronounced.
EGTRRA phased out the federal estate tax, winding up with no estate tax this year. Unless Congress acts this year, which is very unlikely, on January 1 next year the federal estate tax will rrturn, with an exemption of $3,500,000 per estate and a top rate of 55%.
We who work in the tax and estate planning field have been expecting for Congress to drop the other shoe - to vote to stop the federal estate tax from returning to the 2001 level and to return the federal estate tax to what it was in 2009, with an exemption of $3,500,000 per estate and a top rate of 45%.
So far, Congress has not dropped this other shoe. We are still waiting, not to go to sleep, but to get to work on the estate plans which need attention.
If you and your spouse have more than $2,000,000, or you have more than $1,000,000 if you are single, you ought to talk with us about estate planning. This will be important until Congress does drop the other shoe and change the law.
Also, let us tell you about some tax devices, such as transferring the family homestead to your children when property values are very low, or using shares in a limited liability company to transfer value.
