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Tuesday, April 28, 2009

It's Looking More and More Like We Will Keep the $3.5 Million Estate Tax Exemption

With all the talks about the Democrats negotiating a budget in a way to avoid a filibuster on health care, one should not overlook the fact that the budget includes an extension of the current Federal Estate Tax Exemption. Under current law, there is an federal estate tax exemption of $3.5 Million this year, there is no estate tax in 2010 and the estate tax is scheduled to return with only a $1 Million exemption (indexed for inflation) in 2011.

With the budget deficits mounting, there is no practical way the government will give up that revenue and everyone involved despises the uncertainty of the law. So, the extension of the $3.5 exemption will provide certainty to both estate planners and the number crunchers in D.C. It should be noted that it appears the 45% tax on estates over the $3.5 Million threshold will remain intact also.

Who has an Estate and Gift Tax Treaty with the US?

I just noticed a helpful link at the IRS that gives a nice chart detailing which countries have an Estate and Gift Tax Treaty with the US: Estate and Gift Tax Treaties.