California Estate Planning Blog by Kevin Staker

May 21, 2010

Kyl-Lincoln Proposal Appears Dead

Filed under: estate tax,Kevin Staker — Kevin Staker @ 11:11 am
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Two sources, the Sacramento Estate Planning Examiner, and, report the Kyl-Lincoln proposal re phase in of a $5 million estate tax exemption and pre-payment of estate tax are dead. cites a report in Congress Daily that reports 80 percent of Democratic senators oppose both points.  Moreover, Finance Chair Baucus now states there never was a deal in the first place.

By Kevin Staker

May 19, 2010

Some Senate Democrats Balking at Kyl-Lincoln Proposal

Filed under: estate tax,Kevin Staker — Kevin Staker @ 12:59 pm
Tags: , reports that some Democratic senators are balking at the proposal of Senators Kyl and Lincoln to reinstate the $3.5 million exemption and 45 percent rate but then increase the exemption to $5 million and reduce the top rate to 35 percent.  The report indicates the Senate Democrats had a rather “animated” discussion in caucus recently.  Some of the more liberal members questioning why we should be cutting taxes on the wealthy while less affluent people are in economic distress.  Apparently Senator Sanders, one of the most liberal Senators, indicated he favors allowing the $1 million exemption and top 55 percent rate to come into effect in 2011 as present law now provides.

President Obama had pledged in his campaign and his proposed budgets since have indicated he favors reinstating the 2009 law provisions of a $3.5 million exemption and 45 percent top rate.

The present impasse indicates we may very well see no agreement and the old law of the $1.o million exemption and 55 percent top rate may very well come back into effect because of the inability of the two parties to agree on much of anything.

May 12, 2010

Finance Chair Indicates Estate Tax Fix Will Be Part of Bush Income Tax Cuts Bill, Not Small Business; Leading Republican Comments on Possible Changes

Filed under: estate tax,Kevin Staker — Kevin Staker @ 5:04 pm
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The Hill continues its great reporting on the estate tax.  In the latest article, Jay Heflin reports that Senator Baucus, chair of the Senate Finance Committee, has said the estate tax changes will not be part of the small business tax bill as had been previously reported. He states the estate tax portion will be just too large. He states he sees the change from the looming $1,000,000 exemption and 45 percent rate to be part of the extension of the Bush income tax law (except for higher taxable income taxpayers).  The Hill says: “Baucus did not say when the Bush/estate tax bill would move, but hopes to markup the small business tax bill next week.”

In a previous article, The Hill reported Senator Kyl, a Republican senator leading the charge on the estate tax, Senator Baucus, believes he is close to a deal with the other Finance Committee members on a $3,500,000 exemption that would in some way increase to $5,000,000, but with no inflation adjustment.  Kyl has indicated part of the changes would be to allow the wealthy to somehow prepay their estate tax, but at a lower 35 percent rate.   He indicated the hold up is finding “offsets”, meaning tax increases, to pay for the lower taxes that would be received if the estate tax exemption in 2011 is raised from the present law of $1,00o,000 to the $3,500,000 and his desired $5,000,000.

The opinion of this blogger is that Senator Kyl may be expressing what he is wishing for but probably will not get.   If he were on track, one would assume Senator Baucus would have in some way commented on such progress.  Again,  after all is said and done, more is said than done.

By Kevin Staker

P.S. One might think this blog is becoming a fan site for Jay Heflin at the Hill.  He is doing a great job on reporting on the estate tax developments.

May 8, 2010

Talks Continue in the Senate and There Is Also Talk in the House

Filed under: estate tax,Kevin Staker — Kevin Staker @ 1:22 pm
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Members of the Senate Finance Committee and their staff apparently continue to discuss what to do about the estate tax.

Jay Heflin in the Hill reports that talks continue in the Senate.  He reports they are discussing giving taxpayers the option of “prepaying the estate tax”, not sure exactly what that means.   A taxpayer can do the same thing now by making a taxable gift and paying gift tax (actually a wise thing to do by the wealthy because the gift tax paid escapes estate tax, otherwise at death one is paying estate tax on the estate tax that will be paid.)  The incentive would be an unspecified lower rate.

He also reports they are discussing changing the exemption to $3,500,000 with that increasing to $5,000,000 with a 35 percent top rate.  There would be no indexing for inflation, however.  It appears to this author the source of the story is likely a Republican staffer wishing for such changes.   The article also states:

Providing taxpayers with a prepayment option and lowering the estate tax to 35 percent has been discussed for months, but sources said conversations on the matter turned a corner after lawmakers learned the proposal would less expensive as originally expected.

The proposal’s official cost is unknown, since it hasn’t been scored and lawmakers have yet to ink the deal. However, a potential payfor for it could be placing limits on Grantor Retained Annuity Trusts (GRATs). One issue with using measure is the House-passed small business jobs bill includes a similar provision.

Martin Vaughan in an article at reports a leading House Democrat believes the estate tax will be addressed before the November election as part of dealing with the expiration of the “Bush tax cuts”.  He reports that the Senate wants to begin dealing with the issues in June.  The article states:

Senate Finance Committee Democrats peppered Baucus with questions at a closed- door meeting this week about when the panel will act on legislation extending the tax cuts, according to some who were present at the meeting. Republican committee members pressed Baucus for action on a permanent fix for the estate tax, at which point several Democrats chimed in saying they felt more strongly that action was needed to extend the middle-class tax cuts.

Congress has a full agenda for the rest of May and likely well into June, as it wrestles with financial regulatory legislation, legislation to extend unemployment benefits and temporary business tax breaks, and an Afghanistan war spending bill.

That means committees will begin work on the tax cuts in late June or July, with final action by the House and Senate not coming until possibly September or October, according to congressional aides.

Van Hollen, an assistant to House Speaker Nancy Pelosi who also chairs House Democrat re-election efforts, strongly asserted that the extension of the tax cuts wouldn’t be saved for a post-election lame duck session.

Some observers of Washington politics speculate that Democrats will attempt to schedule the vote close to the election in order to take credit for cutting taxes on the middle class.

Heflin’s article is at

Vaughn’s article is at

By Kevin Staker

May 5, 2010

Finally Some Sign of Rousing to Action in the Senate

Filed under: estate tax,Kevin Staker — Kevin Staker @ 4:00 pm
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Reporters from Politico and the Hill report that Senator Baucus, Chair of the Senate Finance Committee, says his committee is trying to take some action regarding the estate tax. They both quote the Senator as follows:

“I’d like to do a small business bill soon,”

“I’ll know more about the estate tax in a few more days,” he said. “It’s going on this week at the staff level and will on the [member] level later on this week.”

Baucus told The Hill that talks on the estate tax will soon involve members.

Baucus intends to address the estate tax issue as part of a small business incentives bill.

It is encouraging that it is reported that Senator Baucus has been consulting with Senator Grassley, the Republican leader of the Committee, and with Rep. Sander Levin, his counterpart in the House.

The reporter for the Hill is Jay Heflin.  Jay has been doing an excellent job of reporting on estate tax developments in Congress, this blog has quoted his reports several times before.  His article is at

The reporter for Politico is David Rogers.  His article is at

By Kevin Staker