Recent Developments in Family Wealth Taxation

Estate Tax—Repeal Likely Dead But Compromise Still Possible

Current law provides for the repeal of the federal estate tax only for persons dying in 2010. Members of Congress have, for some time, been both negotiating and introducing competing bills with changes ranging from a complete and permanent repeal to increased estate tax exclusions and reduced rates. Late this summer, it appeared that a compromise would be struck and that the estate tax would be retained, although with increased exclusions and reduced rates.

The tragedy of Hurricane Katrina, however, had the ancillary impact of at least deferring the prospects for estate tax compromise and, in our opinion, completely derailing the chance for a permanent repeal of the estate tax for some time. Although repeal and reform proponents continue to insist that transfer taxes will be on the 2006 agenda, there are other political and tax items (including AMT and income tax reform proposals) that may otherwise occupy limited