Posted Dec 16, 2010 02:44 pm CST
As the year draws to a close, so too does the estate tax holiday that gave heirs a one-year exemption from taxation on inheritances.
Next year estates will be subject to taxes of up to 55 percent, with a $1 million exemption, if Congress does nothing, TaxProf Blog reports. If Congress enacts a compromise bill, the rate will be 35 percent, with a $5 million exemption.
That’s worrying Duke law professor Richard Schmalbeck, and it’s not because of a dislike for the estate tax. He’s worried that wealthy people with diseases likely to claim their lives in 2011 will decide to speed up the process.
“The concern is suicide,” Schmalbeck writes at TaxProf Blog. “It is not fanciful to imagine that several hundred, or even a few thousand, people [suffering from terminal conditions] will give serious consideration to ending their lives in ways that will benefit their heirs financially.”
He proposes “a very simple solution.” When Congress agrees on a new estate tax, it should make it effective on the date the bill was introduced. “Do we really want wealthy grannies everywhere to be considering a premature good-bye as the estate tax holiday reaches its final days and hours?” he asks.
ABAJournal.com: “Steinbrenner’s 2010 Death May Have Saved His Heirs About $600M”
ABAJournal.com: “Billionaire Dies at a Fortuitous Time”