Reply #43: SUNRISE-SUNSET: Is The Death Tax Really Dead? [View All]

http://www.mcgb.com/CM/Articles/Articles83.asp

Summary of New Law. The law would abolish the federal estate tax in 2010. However, because of the "sunset provision," the tax repeal could be short-lived. The repeal is revoked on December 31, 2010, and tax rates return to their 2001 levels. In the interim, the estate tax exemption, which is now $675,000, will gradually increase to $3.5 million in 2009. The top estate tax rate, which is now 55 percent, will drop to 50 percent next year, and then gradually decline to 45 percent. The exemption amount for gifts increases to $1 million, but the gift tax will not be repealed and the top gift tax rate will be lowered to the top individual income tax rate. A chart summarizing these changes is included in this article.



http://findarticles.com/p/articles/mi_m0EIN/is_2001_July_9/ai_76405240

LOS ANGELES--(BUSINESS WIRE)--July 9, 2001

In a swift move to combat long-term financial planning uncertainty generated by recent federal estate tax legislation, Transamerica Occidental Life Insurance Co. is adding an option to its survivorship life insurance policies issued June 7, 2001, or later, which will allow policyowners to fully surrender their inforce contracts during the calendar year 2010 with no surrender penalties if the repeal of federal estate taxes extends beyond Dec. 31, 2010.

Transamerica Occidental Life developed its so-called "Sunset Option" in response to the "Sunset Provision" of The Economic Growth and Tax Relief Reconciliation Act of 2001. The Act reduces estate taxes gradually over the next nine years until Jan. 1, 2010, when they disappear entirely. However, the Act's Sunset Provision restores estate taxes beginning Jan. 1, 2011, on the same basis that existed before the new legislation went into effect on June 7, 2001.

"The Sunset Provision creates so much uncertainty for clients moving forward," said Joel Seigle, Transamerica Insurance & Investment Group's senior vice president for Life Insurance and Annuity Products, "that we concluded we needed to add a special option to our survivorship products to support sound tax and estate planning efforts.