California Estate Planning Blog by Kevin Staker

October 27, 2010

No News

Filed under: estate tax,Kevin Staker — Kevin Staker @ 2:58 pm
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Have not posted for a couple of weeks because nothing worth posting (and I was in Italy on vacation to keep up my fluency in Italian).   I continue to believe we have even odds between a $3.5 million and a $1 million estate tax exemption as of January 1st.  There will likely be no news until after the election next week


By Kevin Staker

October 12, 2010

Excellent Article on Game Theory and the Estate Tax Chaos in Congress

Filed under: Kevin Staker,Other Kevin Staker Blogs — Kevin Staker @ 4:19 pm
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Donald B. Susswein in an article at benzinga .com has a great application of game theory to the estate tax chaos in Congress.  His analysis largely agrees with this author’s postings regarding the game of chicken going on between the Democrats and the Republicans.  He points out that in the lame duck session President Obama and the Democrats can argue the Republicans are holding the middle class tax cuts “hostage”.  On the other hand, assuming we end up with a Republican Congress (at least a majority in the House and enough moderate Democrats in the Senate) to pass a tax act extending the tax cuts for all income levels, then the President and the Democrats will be labeled as holding hostage the tax cuts for the middle class if the President vetoes such a bill.
By Kevin Staker

October 11, 2010

Many Cognoscenti Agree Estate Tax Will Not Be Fixed

Filed under: estate tax,Kevin Staker — Kevin Staker @ 5:15 pm
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Jay Heflin at the Hill has an article in which he assays the mood in Washington about the estate tax.  He interviews several folk from several interest groups.  Interesting how some still have the delusional thought that the estate tax will be repealed (that vote was lost this  Summer).  The prevailing thought seems to be that there will be so much chaos in the lame duck session that the estate tax will not be addressed (just as it was not addressed in late 2009 to avoid the present incentive for rich folk to do themselves in before the end of 2010).  Again, I now believe Congress will only be able to handle extending just the middle class tax cuts in a slimmed down, one issue tax bill, and will not address the 2011 changes to the estate tax, dividends, and capital gains.  I hope I am wrong.

By Kevin Staker

October 7, 2010

Uncertainty Increases

Filed under: estate tax,Kevin Staker — Kevin Staker @ 8:19 pm
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House Ways and Means Chair Levin has stated he believes Congress will extend the middle class tax cuts and fix the estate tax.  However, he wants the Senate to move first. reports on an English language page that Levin stated:

“It’s preferable that the Senate will act first,” Levin said. “If they can’t act first, they won’t act second.”

Jay Heflin at The Hill correctly points out that if the Republicans win the Senate elections in West Virginia and Illinois as is now appearing very possible, those Senators will be seated very quickly because they are filling vacant seats.  Hence, it will be even harder in the lame duck session for the Democrats to peel off the votes needed to pass the tax cuts just for the middle class.  Hence, they may very well have to choose between tax cuts continuing for all or having no tax cuts for anyone.  Again, the estate tax may be lost in the confusion.

By Kevin Staker

October 6, 2010

No Real News but Becoming Clear Congress Will Have Difficulty in Dealing with the Estate Tax

Filed under: estate tax,Kevin Staker — Kevin Staker @ 4:07 pm
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Congress is in recess for the election.  Hence, no real news on the estate tax.  One small note though, Senate Finance Chair Baucus, who failed in getting the votes in line before the election to fix the estate tax has stated his view on the likely course of the estate tax law.  The Great Falls Tribune reports the following re Baucus at a meeting of Montana rural electric cooperative members:

In response to a co-op member’s question, Baucus said that in the past he voted to eliminate the estate tax charged to inheritances, but added there just aren’t enough votes in Congress to get such a bill approved. Baucus said urban lawmakers don’t understand that a Montana farm or ranch might be valued at $3 million or $4 million, but it doesn’t produce a huge income.   He said he will seek incremental tax changes, such as getting the $3.5 million personal estate tax exemption “indexed,” or automatically raised each year by the amount inflation increases.

Hence, it appears he assume the exemption will be changed in 2011 from the $1,000,000 to $3,500,000.  However, he is personally to blame for the mess we are in now with no estate tax and no step up in basis for all.  Therefore, his opinion carries little weight now.  He and all of us will be subject to the chaos that will occur in the lame duck session with so much for Congress to do and so little time to do it in.  I continue to believe it is more likely than not that the estate tax issue will be “lost in the shuffle”, actually more precisely, forgotten in the chaos.  See the article by Jay Heflin at the Hill on how much of a daunting task Congress will have.

By Kevin Staker