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ESTATE PLANNING ALERT: Repeal of the Federal Estate Tax

The failure of Congress to address the federal estate tax before the start of this year has generated a host of major and complex legal challenges for many existing estate plans!

As you likely know from widespread media reports, estates of individuals dying in 2010 will owe no federal tax under the law as it currently stands. But some sentiment has been expressed in Congress to impose a retroactive tax to cover the estates of even those who passed away before any such change in the law has taken effect. Legal challenges to retroactivity are likely to last for years – with no certainty as to outcome. The current law also provides that the federal estate tax will be back in effect on January 1, 2011, with higher rates and lower exemptions.

Due to this uncertainty, our firm is taking the unprecedented step of strongly recommending that everyone review their estate plan immediately to take into account the alternative possibilities of either (a) no federal estate tax in 2010 or (b) enactment of a retroactive estate tax that may be subject to protracted litigation.

(January, 2010)