Commentary & Perspectives
Important Information for Clermont Wealth Strategies Clients:
Repeal of Federal Estate Tax
In 2001 the Economic Growth and Tax Relief Reconciliation Act was passed by Congress and signed into law by President Bush. That Act contained various provisions regarding the federal transfer tax system (which includes estate, generation skipping transfers and estate taxes). The chart below summarizes the tax ramifications of that Act on the federal transfer tax system:
| Year Estate Tax Exclusion | Generation Skipping | Transfer Tax Exemption | Gift Tax Exclusion |
| 2001 | $675,000 | $1,060,000 | $675,000 |
| 2002 | $1,000,000 | $1,100,000 | $1,000,000 |
| 2003 | $1,000,000 | $1,120,000 | $1,000,000 |
| 2004 | $1,500,000 | $1,500,000 | $1,000,000 |
| 2005 | $1,500,000 | $1,500,000 | $1,000,000 |
| 2006 | $2,000,000 | $2,000,000 | $1,000,000 |
| 2007 | $2,000,000 | $2,000,000 | $1,000,000 |
| 2008 | $2,000,000 | $2,000,000 | $1,000,000 |
| 2009 | $3,500,000 | $3,500,000 | $1,000,000 |
| 2010 | Repealed | Repealed | $1,000,000 |
| 2011 | $1,000,000 | $1,000,000* | $1,000,000 |
Most believed that Congress would indeed act prior to January 1, 2010 to prevent repeal of the estate tax. In fact, the House passed a bill that would have extended the 2009 law regarding transfer taxes, but the Senate did not act upon that bill prior to the end of the year. Therefore, we are left with a current repeal of the federal estate and generation skipping transfer tax. Gift tax is still in effect with a lifetime exclusion of $1,000,000 and annual gift tax exclusion of $13,000.
What does this mean for you?
You should review your current estate plan and related documents immediately, as
many of them may be written with strong connections to the estate tax exemption. Without an estate tax, those
connections could destroy your intentions. It would also be an opportune time to review your financial plan with
your Clermont Wealth Strategies Relationship Manager to ensure that your overall planning is current.
At Clermont Wealth Strategies, we will continue to monitor any action (or inaction) taken by Congress on this issue. Your Relationship Manager can keep you informed of any changes and their potential impact on your individual situation. Please contact your Relationship Manager for further information or to review your financial or estate plan.
*Based on pre-EGTRRA - with additional indexing for inflation.