Estate taxes would increase under proposal before Congress

The window of opportunity may be closing on the use of family limited partnerships and similar entities in succession planning. House Resolution No. 436 was introduced on Jan. 9 by U.S. Rep. Earl Pomeroy, D-N.D. The legislation, known as The Certain Estate Tax Relief Act of 2009, would amend the Internal Revenue Code of 1986, but its name may be a misnomer. As currently worded, H.R. 436 would hardly provide relief for U.S. taxpayers. Instead, its provisions would likely result in substantially increased estate and gift tax payments. The legislation does have some good news for taxpayers. H.R. 436 proposes to freeze the unified credit exclusion amount at $3.5 million beginning next Jan. 1, which shelters the first $3.5 million of a decedent's estate ($7 million for couples) from taxation. It would also freeze the maximum estate tax rate at 45 percent. However, it would eliminate valuation discounts on transfers and estates that hold interests in entities that are not actively traded, or are controlled by other family members. These consequences are devastating for owners of closely held family businesses, partnerships and farming entities...California Farm Bureau