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April 3, 2009

Estate Tax Update

Senate increases inheritance exemption.

Rob Moll

The Senate just passed an amendment to lower the estate tax. CT last reported on Obama's budget recommendation to maintain the estate tax at 2009 levels: 45 percent on assets after $3.5 million or $7 million for couples.

The Senate voted to allow exemptions up to $10 million and tax estates at 35 percent above that level.

The question (for those of us not worried about being affected by this) is: Will the new level decrease charitable giving, since it encourages people to hang on to their money?

posted by Rob Moll | Comments (2)

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Let me look at this as a tithing Christian. The main reason to hang on to money is to avoid being thrown onto Medicaid or my kid for support in my final years. If the exemption is $2 million, then it is to my advantage to spend down to that level - and enjoy the money while I am around. If the exemption is $10 million and my kid gets the $8 million additional to enjoy, then I see no reason to spend down to the $2 million level. And, if I leave $8 million additional in investments to generate income, then my tithe is more and, therefore, I give more to charity with the higher exemption.

Posted By: Fran | April 3, 2009 8:46 PM

If you are have a questions about whether to spend $8 million now or later then your main reason to hang onto money is not to avoid going onto Medicaid. You will have more than enough to live a comfortable life and still avoid being in poverty.

If we give, we should give, why is a tax exemption so important?

Posted By: Adam S | April 23, 2009 9:14 PM