When Congress allowed the estate tax to expire at the end of 2009 it may not have realized that it was setting up a social experiment that could test the values of high-net-worth individuals.
Most estate planners in the second half of the decade never thought that the government would allow the estate tax to be repealed. (Read more about this here: "Extending the Estate Tax: The Battle Heats Up") The expectation was that there would be some type of estate tax reform, but a repeal in 2010, which is what we currently have, was never in the cards. So the decision that planners never asked their clients to make, said Carol Kroch, Vice President and Managing Director Head of Wealth and Financial Planning at Wilmington Trust Corporation, was: “Am I going to give one dollar to my children or one dollar to charity?” Under the estate tax as it stood in 2009, which was a 45% tax on estates of over $3.5 million for individuals, or $7 million per couple, if a client didn’t give to charity their children only got 55 cents for every dollar, Kroch explained. “Now we’re saying, as long as the repeal lasts, I’m really putting my values on the table. I can give my children the whole dollar versus giving the whole dollar to charity.”
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access