New York Times writer Brian J. O’Connor reported last week that, “Critics of the estate tax like to call the federal levy on assets passed on by the wealthy to their heirs the ‘death tax.’ But the better nickname might be the ‘zombie tax.’
“Despite repeated attempts by conservative lawmakers to kill it — and a 2016 campaign-trail vow by Donald J. Trump that ‘no family will have to pay the death tax’ because ‘we will repeal it’ — the estate tax remains a surprisingly resilient part of the United States tax code.
“The tax law passed by Congress in December certainly keeps it alive — on more generous terms. Instead of taxing any amount above $5.49 million per person at a rate of 40 percent, the new law raises that exemption to $10 million, which, when indexed for inflation, allows individuals to pass on $11.2 million and couples to transfer twice that amount without paying a penny of tax.”
The Times article noted that, “But leaving the estate tax in place means America’s richest families now face the prospect of scurrying to tax lawyers to revise older estate plans, and may need to do so again before the end of 2025. The new exemption is on the books for only eight years, and if Congress doesn’t change the law again, estates could face tax bills after 2026 for moves made under the new, temporary limits.
“‘Some of the wealthier clients are happy’ with the changes, said Brian Jenney, a partner with Kemp Klein in Troy, Mich. ‘But when you tell them it ends in 2025, they’re frustrated because they’re still going to be alive.'”
Last week’s article added that, “Despite these complications, what’s clear is that even though Congress didn’t kill the estate tax, the new limits come close.
“‘The estate tax used to cover a lot more people even in recent decades, up to 2 percent of all estates. Now we’re down to less than one-tenth of 1 percent,’ said Chuck Marr, director of federal tax policy for the Center on Budget and Policy Priorities in Washington. ‘The estate tax is hanging on by a thread.'”
