Estate Planning to Cope With the Current Legislative Uncertainty

John J.Scroggin (Scroggin & Company, Roswell, Georgia) has published hisarticle, Estate Planning to Cope With theCurrent Legislative Uncertainty, in the May 2007 edition of EstatePlanning.

Here is the conclusion:

With the partisan wrangling thatlikely will continue as a result of the November 2006 election, we could befacing a confused, quickly changing landscape: 2-1/2 years of high exemptionsand lower tax rates, one year of no estate tax (and generally a loss of step-upin basis), and then potential return to higher tax rates and lower exemptions.

Anyone who says he knows whattransfer tax legislation will be enacted in the next four years is eitherclairvoyant or deranged. Unfortunately, no one has any real idea what Congressis going to do with the transfer tax rules in the next four years. Planning in this time of uncertainty is goingto require great flexibility and constant review and updating. Virtually every estate plan will have to bere-examined in the net three years either to account for Congress’s failure toenact permanent transfer tax legislation or to deal with the terms of anypermanent legislation that is passed.

Who benefits from this chaoticenvironment and the return to 2001? Seven groups will reap the greatestrewards: Roughly half the states which remain coupled to the federal estate taxwill receive an unexpected revenue boost. Charities will see increased estate contributions (particularly of IRDassets) to avoid estate taxes. Fee-basedplanners who provide estate planning advice and estate attorneys will beinundated with work. CPAs will have moretax returns to file. The insuranceindustry should see substantial increases in life insurance sales to fundestate taxes. And politicians will seeincreased contributions to their campaigns from people on both sides of thedebate. And the client/taxpayer? He’ll be paying for all of it.