The politicians probably won’t make any decisions on the 2013 estate tax until after the November election. Apparently, they don’t want the voters to know how they would vote on this important issue before the election. Are you surprised?
Here is the current status: In 2012, estates less than $5,120,000 (the exclusion amount) will not have to pay an estate tax, double that amount for married couples. However, unless the law is changed, the exclusion amount will drop to $1,000,000 in 2013. This means if you die in 2013 and have assets worth more than $1,000,000, the amount over $1,000,000 will be taxed at 55%. Keep in mind, life insurance death benefits count as part of your taxable estate.
Business Week describes the political environment:
Lobbied by business owners and billionaires, Democrats including Mark Pryor of Arkansas and Mary Landrieu of Louisiana resisted a proposal from President Barack Obama to tax individual estates of more than $3.5 million — roughly three in 1,000 — at a top rate of 45 percent. The split among Democrats, who control the Senate, will give Republicans more influence on the issue after the Nov. 6 election.”“It’s something that’s really divided and perplexed our caucus about what’s the fair way to move forward,” said Landrieu, who supports repealing the estate tax and wants to reach a compromise with Republicans. “We don’t have the votes to do anything, really, with it.
If the Democrats are at least willing to raise the projected 2013 exclusion amount from $1,000,000 to $3,500,000, then maybe next year will not create an estate tax panic. Let’s hope the exclusion amount is raised to at least $3.5M, and maybe more.