Watch Out, Grandma!

Posted by Don W on December 22, 2009 under Estate Tax and Planning, Tax Matters in the News

Happy New Year 2010 – watch out, Grandma!

Not long ago, Senator Charles Grassley, (R-Iowa) – the same senator who tried to kill the expat’s foreign earned income exclusion a few years back – criticized healthcare legislation because he didn’t want “Grandma to face a death panel”.

But it could happen – for an entirely different reason:  Last Wednesday, at a meeting of the Estate Planning Council of Seattle, the speaker – a Virginia attorney well-up-to-date with legislative affairs – reported that Congress has yet to act to prevent the federal estate tax rate from going down to ZERO, effective 1 Jan 2010.  That’s 10 DAYS from today as I write this.

For years, among tax and legal professionals, this possibility has been somewhat cynically known as the “throw Grandma from the Train” year – because the law that authorized the 2010 zero tax – for one year only – also authorized reverting to the 2002 estate tax law which re-imposes such a tax starting January 1, 2011.

The Estate Planning Council speaker forecast Congress’s odds of changing this law in the next 10 days as no better than 10%.  Most everyone assumed that someday – before NOW – Congress would modify the law in plenty of time to avoid this outcome.  Watch out, Grandma; and good luck!