The 2011 Estate Tax Exemption - Things Are Looking Up!

President Barack Obama's tax deal with Republican Congressional leaders passed a key Senate procedural hurdle today, CNN.com reports. As indicated in my previous post, the individual estate tax exemption went from $3.5 million (at a 45% tax rate) in 2009 to zero in 2010 under a legislated expiration date. If Congress fails to act by the end of the year, the individual estate tax exemption in 2011 will be $1 million with a 55% tax rate. Such a low threshold would place an astronomically large amount of the American population (and pretty much any Californian owning real property) within the estate tax's reach. Under Obama's compromise with Congressional leaders, which is currently steadily making it's way through the legislative process with hopes of being passed before the 111th Congress adjourns, the individual estate tax exemption would rise to $5 million with a 35% rate. Stay tuned for updates if/when Congress passes this tax deal, or for further explanation as to possible estate planning consequences if they fail to push it through...