As the year 2010 draws to a close, many are making New Year’s resolutions – but what about resolving to leave your heirs more money? A the year closes, so too does the estate tax holiday that gave heirs a one-year exemption from taxation on inheritances. Next year estates will be subject to taxes of up to 55 percent, with a $1 million exemption, if Congress does nothing, TaxProf Blog reports. If Congress enacts a compromise bill, the rate will be 35 percent, with a $5 million exemption.
This change in the inheritance tax worries a Duke law professor, Richard Schmalbeck, because of the obvious incentive for wealthy people with fatal diseases to decide to speed up the process. He estimates that perhaps several hundred, or even a few thousand, terminally ill patients may give serious consideration to ending their lives in ways that will benefit their heirs financially. He proposes “a very simple solution.” When Congress agrees on a new estate tax, it should make it effective on the date the bill was introduced.