Good news for entrepreneurs and investors, at least the ones who are very sick. As of today, the death tax is repealed. But this silver cloud has a couple of dark linings. First, the tax springs back to life next January 1, so healthy taxpayers are out of luck. Second, the grave-robber politicians may try to reinstate the tax – and even make it retroactive. But as this Wall Street Journal article notes, it is unclear whether such an odious step would survive a legal challenge:
Starting Jan. 1, the estate tax — which can erase nearly half of a wealthy person’s estate — goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life’s most trying episodes only more complex. “I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. …The macabre situation stems from 2001, when Congress raised estate-tax exemptions, culminating with the tax’s disappearance next year. However, due to budget constraints, lawmakers didn’t make the change permanent. So the estate tax is due to come back to life in 2011 — at a higher rate and lower exemption. To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. …Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes. “Whenever he wakes up,” says his lawyer, “He says: ‘What day is it? Is it Jan. 1 yet?'” …Congress could pass an estate tax next year and make it retroactive to Jan. 1. Whether that would withstand a court challenge is a subject of debate in the estate-planning world. …In addition, the composition of the Supreme Court has changed, and some financial advisers believe the court might not again bless a retroactive law. …The situation is causing at least one person to add the prospect of euthanasia to his estate-planning mix, according to Mr. Katzenstein of Proskauer Rose. An elderly, infirm client of his recently asked whether undergoing euthanasia next year in Holland, where it’s legal, might allow his estate to dodge the tax. His answer: Yes.
[…] Needless to say, I’d like to see the United States on this list at some point (we were there for one year!). […]
[…] Needless to say, I’d like to see the United States on this list at some point (we were there for one year!). […]
[…] Smart rich people opted to die in 2010 (admittedly an extreme form of tax avoidance). They also avoid certain […]
[…] Smart rich people opted to die in 2010 (admittedly an extreme form of tax avoidance). They also avoid certain […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]
[…] Wall Street Journal over the weekend. The story begins with a description of how the death tax rate dropped from 45 percent in 2009 to zero in 2010, and then notes the huge implications of a scheduled increase to 55 percent in 2011. Congress, […]