"Permanent" means 4 months
In Washington "Permanent" means about 4 months!
Only 3 months have passes since President Obama signed into law the latest changes to federal estate tax law. The new law increased the federal lifetime estate and gift tax personal exemption to $5.25 million for 2013 and lowered the maximum estate tax rate to 40%. In addition, this exemption would automatically increase each year to account for inflation. Both Congress and the President called this the "Permanent" Estate Tax. For the first time in nearly a decade, Americans relaxed knowing with certainty that the estate tax exemption was locked in at $5.25 million with annual increases for inflation.
Recently President Obama released his proposed budget to Congress. Some are shocked that President Obama's budget proposal lowered the exemption from $5.25 million to $3.5 million and increased the maximum estate tax rate from 40% to 45%. With Obama's new budget proposing to increase federal estate taxes, any certainty is now greatly in doubt.
Wealthy Nebraska and Iowa residents have begun working with estate planning attorneys to take advantage of the current higher tax exemptions in case Congress and the President increase federal estate taxes. Clearly, the "Permanent" estate tax law could have a short life.
- Darren R. Carlson, founding partner of Carlson & Burnett, LLP, practices estate planning and has helped numerous farm families set up family limited partnerships to take advantage of the current higher exemption.