Obama Administration Unveils Deficit Reduction Package

The current estate tax rules are set to expire in 2012, and the Obama administration has unveiled a deficit reduction package that would essentially revert federal estate taxes back to 2009 numbers. Under the new package, the current $5 million per person exemption and 35% maximum rate would decrease to a $3 million per person exemption and a 45% maximum rate.

The proposals do not include changes to Social Security or increases to the current Medicare eligibility age. The eighty page deficit reduction package does seek to increase taxes by 1.6 trillion over ten years and calls for a $580 billion cut to programs including Medicare and Medicaid.

It is currently unclear whether the proposed package would alter the current reunification and portability features of the current estate tax law. Additionally, it is unclear exactly when the proposals would go into effect.

See Arthur D. Postal, Obama team targets estate tax, DRD, COLI, life settlements, The National Underwriter, Sep. 19, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for brining this article to my attention.