California Estate Planning Blog by Kevin Staker

November 15, 2012

Obama Says Tax Hike on Wealthy a Condition to Deal on Avoidng the Fiscal Cliff – Estate Tax Effect

Filed under: estate tax,estate tax news,Kevin Staker — Kevin Staker @ 10:50 am

President Obama in his press conference yesterday said that raising income taxes on the wealthy is a condition to his signing off of a fix to the “fiscal cliff”. For a complete report on the press conference please go to

I view this stance as substantiating my view that Pres. Obama might stick to his guns and allow the tax rates to go up on January 1st and then paint the Republicans as the impediment to 98 percent of the taxpayers getting a tax cut. When they do reach a settlement the estate tax fix will occur. I believe a $5.12 million exemption adjusted for inflation, likely to $5,220,00 based on 2 percent inflation, will be agreed to.  However, in the deal I believe the President and the Democrats will demand, and get, a gift tax exemption of only $1,000,000, albeit possibly adjusted for inflation.
Kevin Staker

Estate Tax News

November 13, 2012

Joint Committee on Taxation Issues Report on Effects on Estate Tax Revenue of the “Fiscal Cliff” Scenarios

Filed under: estate tax,estate tax news,Kevin Staker — Kevin Staker @ 11:44 am
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The Joint Committee on Taxation of the United States Congress (“JCT”) has issued a report on the revenue alternatives of several outcomes of the “Fiscal Cliff”. The report is located at

It provides an interesting insight into the small number of decedent’s estates affected by the estate tax. The political attention paid to this issue far exceeds the percentage of decedent affected and the amount of revenue raised.
It is estimated 2.4 million people died in the United States in 2008.  Of those, the JCT states only 17,172, less than 1 percent, had to pay any estate tax, a total of $24.87 billion paid.  They state only $10 billion in estate tax revenue will be received in 2012 with the exemption at $5,120,000.

They estimate if we go back to the $1,000,000 estate tax exemption in 2013, about 55,200 decedent’s estates will pay total estate tax of $37.7 billion.   Finally, they estimate if the President’s proposal of having a $3.5 million estate tax exemption is adopted, a total of $17.7 billion in estate tax would be paid for decedents dying in 2013.  They estimate if the 2012 law is extended, an exemption of $5.12 million adjusted for inflation, only $11 billion in estate tax would be collected in 2013.

Please note the report also thoroughly discusses the other changes that will occur in the estate and gift tax arena if we “go off the fiscal cliff”.  Those include the following (in addition to those mentioned in my prior post):

–     The qualified family owned business deduction would come back in the amount of $675,000.

–     Exclusion from the taxable estate of 40 percent of the value of any land subject to a qualified conservation easement, up to a maximum exclusion of $500,000, would again have certain geographic restrictions.

Kevin G. Staker

Estate Tax News

November 12, 2012

Estate Tax Five Scenarios

Filed under: estate tax,estate tax news,Kevin Staker — Kevin Staker @ 3:01 pm

Politico has a good article on the possible outcomes on the “fiscal cliff”, part of which is the estate tax changes.  This is located at

Personally I believe the most likely outcome is that nothing will be agreed to by January 1st.  However, President Obama and the Democrats will then likely win the game of chicken with the Republicans.

To summarize, below are the changes that will go into effect on January 1st if the President and the Congress do not act:

                                                                                                                     Present                                                            January 1, 2013

Estate Tax Exemption                                                                 $5,120,000                                             $1,000,000

Gift Tax Exemption                                                                      $5,120,000                                             $1,000,000

Generation-Skipping Transfer Tax Exemption                                    $5,120,000                                             $1,340,000

Maximum Tax Rate for the Above Taxes                                          35 percent                                              55 percent*

Unused Estate Tax Exemption from Deceased

Spouse to Surviving Spouse  (“portability”)                                    Yes                                                               No

(* Actually 60 percent on estates/gifts above $10,000,000 and under $17,184,000.)

Kevin Staker

Federal Estate Tax News Blog

November 8, 2012

Deja Vu All Over Again – the Saga of the Federal Estate Tax

Filed under: Uncategorized — Kevin Staker @ 3:04 pm

I was not that great at posting about estate planning in general in California. My practice continues in estate planning and administration. However, because of my experience as an aide to a U.S. Senator decades ago, I am very much interested in the latest news about Congress and the President and their machinations regarding the federal estate tax.

Not much time at the moment but a brief, initial comment. I believe there is a significant (still less than 50 percent) chance the President will let the Bush tax cuts expire on January 1st. Hence, there is a chance we will go back to the $1,000,000 estate tax exemption. More to come.

Kevin Staker
Federal Estate Tax News