Estate Tax.  As you may know, there is no estate tax in 2010 but it is scheduled to return with an exemption of only $1 million in 2011.  Although it is impossible to say for sure in this uncertain economic time of governmental bailouts, we think it is likely that the Congress and the President will pass estate tax reform in late 2010 that will keep the estate tax in place, with an exemption of $3.5 million.  

The first reason we believe the exemption will be maintained at $3.5 million is that President Obama  expressed approval for an exemption of at least $3.5 million.  The second reason is that the House, last December, passed a bill  in favor of keeping the estate tax, with an exemption of $3.5 million. The Senate vote fell short by 2 votes.  The next reason is simply that there is too much money at stake for full estate tax repeal, especially in light of the recent financial bailouts.  Lastly, there is broad bipartisan support for an exemption of $3.5 million, as less than one-fourth of one percent of people would pay estate taxes at that level.

The fact that the Federal Exemption will likely remain at $3.5 million does not eliminate the need for estate planning, however.  One reason estate planning remains important is the Tennessee Inheritance tax exemption is only $1 million dollars.  Another reason estate planning remains important is all of the non-tax issues, such as asset protection and insuring your assets pass to whom you want.