April 8, 2009 The Wall Street Journal and other sources have reported that President Obama wants to freeze the estate tax credit at its current level. This means that estates with less than $3.5 million in value can be transferred free of the estate tax at death. In other words, the vast majority of us (98%) won’t have to worry that our children’s inheritance will be reduced by a 45% tax when we die. The administration’s proposal also means that the temporary total repeal of the estate tax, which would have meant that even the very rich could have passed their entire estates free of estate tax at death, will not occur in 2010 as planned. It also means the estate tax credit won’t reset to Clinton-era levels of $1 million dollars and a 55% tax rate in 2011, which is when the current legislation, passed as part of the 2001 Bush tax cuts, was scheduled to expire. The Senate’s recent legislation included an amendment that would increase the Estate Tax Exemption to $5M per individual, but that has to be hammered out with the House of Representatives, who if left to their own devices might argue for lowering it (don’t fret – they’re not left to their own devices!). What this means for you and your estate planning attorney is that now is the time to do some serious planning – let’s pull out those dusty trusts, kick the tires, and do some serious wealth management. If you’ve been putting it off because of uncertainty about the estate tax, now is the time to act!