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Tuesday, July 4, 2006

Estate Tax Redux

Things are looking dim for a Senate compromise on a permanent increase of the estate tax exemption, and a higher applicable exclusion amount exempt from tax. Given the possibility that Republicans may lose power or voting strength this November, raising the exclusion to -- say -- $5 million per individual decedent (instead of the current $2 million) might be the best which can be hoped for. Look for a vote in the next week, or two.

For many of you who do not follow the estate tax roller-coaster, the exclusion amount is set to increase until 2009, then expire in 2010, and then come down to pre-tax relief levels (about $1 million) in 2011.

My theory: this is a long shot in the Senate -- especially given the fact that this is an election year. The Dems have positioned themselves to be the anti-tax reduction party.

If the estate tax remains in it's current wacky state -- with the tax reduction set to "sunset" in 2011 -- don't look for financial and estate planners to shed any crocodile tears. Face it -- many advisors depend upon the insanity of the Internal Revenue Code to make a living...

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