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Rumor Has It…One Year Extension on Bush Tax Cuts

The most current reliable rumor on backside negotiations between the Republicans and Democrats that effect Estate Taxes and other tax issues is that there will be a one year extension (or “patch”) on the Bush Tax Cuts.  As you know, the Bush Tax Cuts that went into effect in May 2001 are set to expire on December 31, 2012, without extension or enactment of new law.  Given the fierceness of the campaigns and the coming elections, it seems very unlikely that any kind of a long term deal will happen before the election.  However, the strong rumor is that the Republicans and Democrats have agreed on a one year extension of the current Bush Tax Cuts which will give us another year, so that the next Administration and next Congress can determine what the new tax law will look like.

Currently, under the temporary extension, which expires December 31, 2012, there is a very large Estate Tax exemption so that Estate Taxes would only hit less than an estimated 1% of the public.  If it were to roll back to a little over a $1 million exemption, it is estimated it would hit 3% of the public. 

Without an extension of the current Tax Law by Congress and the White House the exemption would automatically roll down to the roughly $1 million amount (you’d only be taxed on assets over roughly $1 million).

We’ll continue to watch this matter.  It is anticipated that the elections will be close in both Congress and the White House.  The outcome of those elections will certainly set the tone for what the next Tax Laws will look like which are likely to roll out in 2013. 

One of the upsides of The LifePlan System™, which is our Formal Legal Update Program, is that we update legal documents for our clients to keep them current with the law as it changes.  It always changes.

At the Law Firm of Steven Andrew Jackson, Attorney and Counsellor at Law, we have helped hundreds of families protect themselves and their loved ones, avoid Estate Taxes and Probate Costs, and keep their Estate Plans current with the law through The Customized Protective Estate Planning Solution™.