California Estate Planning Blog by Kevin Staker

December 31, 2012

Estate Tax Is One of the “Sticking Points” Preventing Avoidance of “Fiscal Cliff”

Multiple media sources report the estate tax issue is one of the remaining issues preventing avoidance of the Fiscal Cliff. It appears the most important issue, the income level at which the Bush Tax Cuts will not be extended, will be settled at $400,000 for a single person and $500,000 for a couple. That about splits the difference on the positions of the two sides.

The major remaining issues are the Republicans want to extend the present estate tax exemption, $5,120,000, and rate, 35 percent, and the Democrats want $3,500,000 and 45 percent (the 2009 law). On the other hand, the Democrats want to extend long term unemployment benefits, and the Republicans oppose such as a luxury we cannot afford.

Bloomberg reports the estate tax is still a major issue.  See http://www.bloomberg.com/news/2012-12-30/mcconnell-says-he-called-biden-to-try-to-jump-start-talks.html

However, ABC News reports they have already agreed to the Republican position.  See http://abcnews.go.com/Politics/OTUS/fiscal-cliff-biden-mcconnell-close-minute-deal/story?id=18099848#.UOHF1KwzR_c

The Washington Post has a good, concise explanation of what is involved in the estate tax issue.   See http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/30/the-fiscal-cliffs-estate-tax-fight-explained/

Z. Byron Wolf and Sarah Parnass at ABC News are keeping an excellent live update of what is going on.  See http://abcnews.go.com/blogs/politics/2012/12/live-updates-countdown-to-fiscal-cliff/

I predict each side will capitulate and give the other what they want. This is want happened at the end of 2010.

We shall see.

Kevin Staker
Estate Tax News Blog

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