Death and taxes are both inevitable, but trying to deal with estate taxes keeps getting trickier.
If you own a farm or ranch and want to leave most of it to your heirs, plan to die in 2010.
As absurd as that may sound, it is the only year that the so-called "death tax" is scheduled to be fully repealed. After 2010, your estate could be hit with a whopper tax bill.
On June 7, 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001, which included the "Estate Tax repeal:” It marked a compromise, under which Congress created a 10-year-phase-out that gradually allows more of your estate's value to be deducted each year until 2010, and then the estate tax will be fully repealed.
The hitch is the tax will only be repealed for that one year. After that, the level jumps back to rates established in 2007 and
For years, farm and ranch groups have been working to permanently repeal any death tax.
With budget deficits looming, most lawmakers are reluctant to give up or offset the revenue that is currently generated from this type of tax.
For farmers, complicating estate planning efforts, prices for corn, soybean and wheat prices soared to record levels earlier this year, and farmland prices also pushed to unprecedented heights.
Landowners, who built an estate plan a few years ago, might find that their assets have doubled or even tripled in value today, making some of these tax exemptions unrealistic. Given all of these changes and the uncertainty surrounding the tax laws, it is becoming necessary to revisit your attorney and estate planner every year.
In the 110th Congress, there have been several efforts to address estate tax reform, but they have not gained any significant momentum.
As part of the Senate budget resolution, a measure offered by Senator Max Baucus could pave the way for future actions that will lessen the burden of Death Tax on ranching families. The Baucus amendment does not actually alter current tax law, but sets aside funds for the Senate Finance Committee to address some form of estate tax relief within the next five years.
Columnist Sara Wyant, President of Agri Pluse Communications.