Estate Tax in Limbo

06/16/06 - 11:48 AM EDT

Tracy Byrnes

The estate tax is again the talk of the town in D.C., and all I can say is:

Pull the trigger already!

This is turning into a Hollywood saga -- like the never-ending Britney Spears-Kevin Federline drama. Are you in it for the long run or not? Either way, make a call so we can all move on.

Because tons of people are in limbo. And like Britney and Kevin, folks with big fat estates have no idea how to plan for the future.

And even if you don't have a big estate now, you may in the future. Current rules -- though they're very likely to be changed -- say that by 2011, anyone with an estate over $1 million will be affected by this tax. That's not too hard a number to reach when you include real estate equity and retirement plans. So, this estate tax controversy concerns many of us.

For now, the estate tax is not going away. Last week, the Senate turned down President Bush's bid to permanently repeal the tax. That marked a big disappointment for the GOP, since it was close to a full repeal last summer. But then Hurricane Katrina hit, costing more time and energy than anyone ever imagined. So, the estate tax debate was shelved for a bit.

But Republicans are sure to bring up the issue again, and it needs to be settled. Because unless you consult a Magic 8-ball to determine how the issue will be resolved, there's not much planning you can do.

The Planning Problem

Under the present rules, as a single person, up to $2 million in assets are estate tax free at your death ($4 million for a married couple). That number -- or exclusion -- is schedule to jump to $3.5 million per person (or $7 million per married couple) in 2009.

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