Dear Friends, Colleagues, and Clients,
In my last issue of Client Alert, I reported that the rumor mill would have the Congressional Super Committee recommending the earlier expiration of the generous gift and estate tax exemption set to expire at midnight on December 31, 2012. The Super Committee failed to reach agreement on anything, so we many never know if this was fact or fiction.
Just because the Super Committee failed to reach an agreement hasn’t stopped the tax raising members of Congress from introducing legislation to reduce the $5M estate and gift tax exemptions presently called for under the changes to the 2010 Tax Reform Laws legislation before they are set to expire next year.
Congressman Jim McDermott (D. Wash), a veteran member of the House Ways and Means Committee and Co-Sponsor Charles Rangel (D-NY), introduced H.R. 3467 “The Sensible Estate Tax Act of 2011”, which proposes to extend the current reach of the estate and gift tax by reducing the amount of the estate and gift tax exempted to $1 million from $5 million and raises the tax rate to 55% from 35%, bringing it back to pre-Bush era levels. The effective date of the proposed Bill would be December 31, 2011. “I’m not against people making money in this country, but I do think they have a responsibility to give some of it back,” especially at a time of a deep federal budget deficit, McDermott said in an interview this week.
Highlights of H.R. 3467 include:
- Estate and Gift Tax Exemption would be reduced to $1M from $5M
- Top tax rate increases to 55% from 35%
- Portability of estate tax exemption made permanent
- Credit for State death taxes would be restored
- Valuation discounts for intra family transactions would be restricted
- Benefits of GRATs would be significantly lessened
- Duration of GST exemption would be limited to 90 years
The Bill was just introduced (November 17, 2011) and has only one sponsor, but this Bill should be a wake-up call for those who could take advantage of the recent tax law changes but have been procrastinating taking advantage of the generous but temporary increased gift tax exclusions, discounted wealth transfer opportunities, and generation skipping transfer planning.
We will continue to monitor the progress of this legislation through future Client Alerts.
We also want to recognize Prof. Jerome Hesch, Special Tax Counsel to the law firm, for being inducted into the National Association of Estate Planners and Councils Hall of Fame, one of only 10 recipients to receive this award for 2012. Jerry has served his profession, academia, and clients with distinction and we congratulate him in attaining this prestigious award.
Jeffrey M. Verdon Law Group, LLC