In Capital Letter No. 28, dated July 25, 2011 and published on the ACTEC website, Virginia estate planning attorney Ronald D. Aucutt writes about the debt ceiling debate and how it relates to his predictions about the future of federal estate taxes. In his letter, Mr. Aucutt compares the last minute shenanigans that have occurred over the years regarding the fate of federal estate taxes with the last minute shenanigans that are happening right now regarding the debt ceiling and concludes the following with regard to what will happen with federal estate taxes in 2013 and beyond:
- There will be a "deal."
- The deal will come with time running out, or maybe even in overtime.
- The deal will include surprises.
- Meanwhile, the suspense will be nearly unbearable.
Mr. Aucutt further states: "[Even] a return to 2009 law would be distasteful. A return to 2001 law would be intolerable. The fact that a return to 2001 law is already the law in 2013 if Congress does nothing means that the pressure to do something to prevent that will be very great. And if Congress does anything, the pressure to maintain an exemption no lower than $5 million (probably indexed for inflation) and a rate no higher than 35 percent will be almost as great. Anything is possible, and surprises seem almost inevitable, but the $5 million exemption and 35 percent rate of current law, themselves a surprise when they were introduced without even a phase-in last December, now have at least a fighting chance of sticking around."
Of course, I stated my prediction about what I think will happen with federal estate taxes way back in January 2011 - I believe that the estate tax will be completely repealed - and I still stick by this prediction. (To read about my prediction and the reasoning behind it, refer to my January 25, 2011 post, Betting on Estate Taxes - Are You Game?) But those who have voted in my new Estate Tax Straw Poll disagree with me and agree with Mr. Aucutt - the majority predict an extension of the current $5 million estate tax exemption and 35% estate tax rate. But as Mr. Aucutt points out, there will inevitably be some surprises. All of this leads me to believe that I'll be writing about the fate of federal estate taxes for the next few years without any concrete resolution and perhaps, as Mr. Aucutt speculates, well past the eleventh hour.
Let me know what you think will happen with estate taxes by voting in my Estate Tax Straw Poll and posting your comments in my opinion piece Should Federal Estate Taxes Be Repealed because I'm very interested in what others have to say about the future of estate taxes and I know many of my estate planning colleagues are also very interested.