Estate Tax To Stay At 3.5 Million?

Now that the elections are done, there are some really large looming financial questions that the new mix of Republicans and Democrats need to decide before the year ends.  As the band Rush wrote in one of their songs, “If you choose not to decide, you still have made a choice”.  It would be great to see some movement made on this estate tax issue so we don’t see some faux Billy Crystal actor throw momma from the train before the end of 2010.

For those that don’t remember where the estate tax was at before 2010, in 2009 the exemption was 3.5 million with a 45% tax above the 3.5 million threshold.  For a couple, this meant roughly a 7 million dollar exemption.  With only 3 out of every 1,000 estates (source: www.wsj.com) having an estate above this 7 million dollar threshold, the level set in 2009 only affected a minute number of American citizens.

Basically, there are three routes our newly elected representative can head with this issue:

  • Do absolutely nothing and head back to 2001 rates.  A 1 million dollar estate tax hardly reflects the growth of wealth over the last decade.
  • Make the current 2010 rules permanent, completely eliminating any estate tax in the United States.
  • Have some compromise which is where the two parties seem to constantly clash heads.

I have simple solution for our leaders.  Make the 3.5 million dollar threshold and 45% excess tax permanent along with an inflation adjuster on a yearly basis to keep pace with whatever normal inflation is in the United States.

  • First, only .3% of the estate in the U.S. would be affected.  A truly small number of households.
  • Second, it would represent a reasonable permanent level today as long as there is some ability to correct as inflation adjusts the real value of the dollar.
  • Last, if you are worth more than 7 million, there are still plenty of estate planning techniques to either lower your overall estate or provide estate liquidity to pay the taxes.  If you have more than 7 million and can’t find a great financial advisory team, oXYGen Financial would be more than happy to help!

It only really makes sense to create policies that we can plan to stick to for now and in the future.  Constantly changing these values and levels of estate tax only makes it more confusing to build a plan.  In 2009, we had a level at 3.5 million that I hardly ever heard anybody complain about in the financial community.  Keep it simple Congress.  3.5 million and 45% with an inflation kicker!

oXYGen Financial, Inc. co-CEO Ted Jenkin  is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.

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About the author  ⁄ Ted Jenkin @ Your Smart Money Moves

Ted Jenkin @ Your Smart Money Moves


My friends and family all think I’m a workaholic, but I say I’m just a guy that loves to help people do better in life.

My mother is still the only one that calls me by my real name Theodore Michael, my wife calls me Teddy, but for the rest of you it is just plain old Ted.

Ever since I was a little kid, I always loved money and being an entrepreneur. In fact, I still have cassette tapes of me talking to my grandmother at the age of five and my mother tells me all the time how much I played with money as a kid...

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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.

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