Friday, September 19, 2008 Obama and McCain on Federal Estate Taxes In 2008, each person can pass $2 million in assets free of federal estate tax at death. The maximum federal estate tax rate on assets exceeding this $2 million exemption amount is 45%. Under current law, this $2 million exemption amount is scheduled to increase to $3.5 million per person in 2009, is scheduled to be unlimited in 2010 (meaning no matter how large your estate is it can pass free of estate tax), and then the exemption reverts to $1 million in 2011, and thereafter, with a maximum federal estate tax rate of 55% on assets in excess of the $1 million. It is widely believed Congress will not allow the entire repeal of the federal estate tax in 2010 to occur and will instead pass legislation in 2009 under the new presidency. Where do the candidates stand? Obama favors a $3.5 million exemption per person and a maximum federal estate tax rate of 45% on assets over this amount, whereas McCain favors a $5 million exemption per person and a maximum federal estate tax rate of 15%. What legislation actually makes it through Congress, especially in this turbulent economic climate, however, is anyone's guess. |