he following: "$11,000 (2004 - 2005), $12,000 (2006 - 2008), $13,000 (effective January 1, 2009 per IR 2008 -117)" and the applicable exclusion amount is "increased to $3,500,000 for estates effective for decedents dying on or after January 1, 2009 and remains at $1,000,000 for gifts" (IRS, 2008, p. 1).
As a part of the Economic Growth and Tax Relief Reconciliation Act of 2001, the U.S. Congress passed a $1.35 trillion tax cut bill to take place over a ten-year period. Within this bill is the repeal of the federal estate tax in 2010. The tax bill expires at midnight on December 31, 2010 and on January 1, 2011 provisions of the bill revert to current law. The estate tax repeal is to last one year. Thus, exemption amounts of $3.5 million and maximum estate tax rates of 45% in 2009 will be repealed in the year of 2010. Gift tax will remain in effect even after the estate tax is repealed (Vanerelli, 2001).
Issues Related to the Estate Tax 2010 Repeal
Everything is included in the taxable estate and while the 2001 estate law increased the amount of the estate to be sheltered from tax, the contents did not change. Values for 2004 and 2005 alerted a person of the need for estate tax planning if the taxable estate reached $1.5 million. However if this plan could be postponed until 2009, $3,500,000 would be the amount to be considered for estate tax planning (Palermo, 2009). If the estate tax is repealed in 2010, by 2011 this amount would be changed to match pre-2001 one levels. This change has the potential to trigger ethical issues.
An ethical issue related to the estate tax repeal is the consideration of pushing a death to take place in 2010 instead of using life-support and emergency measures to prolong life since estate taxes will be higher following the repeal. Pender (2001) reported, "there's a morbid joke going around estate planning circles: If you have to die, do it on Dec. 31, 2010" (p. 1). ...