On The Money

Don’t count on an estate tax repeal by Richard Behrendt, first vice president and senior estate planner with Robert W. Baird & Co. Inc., Milwaukee.

“To the dismay of most observers, Congress has ended its 2009 session without resolving the frustrating uncertainty surrounding federal estate tax rules. Efforts in the Senate to extend the 2009 estate tax rules, which included a $3.5 million exemption and a 45 percent tax rate, stalled just before the Christmas holiday.

As a result, for the first time since the modern version of the federal estate was enacted in 1916, 2010 began with no federal estate tax.

But a celebration of the repeal of the federal estate tax may be premature for several reasons.

The repeal of the federal estate tax under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) is only temporary. EGTRRA is scheduled to sunset at the end of 2010, and the levy on estates would come roaring back in 2011 at the pre-EGTRRA levels of a $1 million exemption and a top tax rate of 60 percent.

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