Die Now for Once in a Lifetime Estate Tax Savings? Congress Creates a Quagmire.

Summary -A Congressional showdown has produced an estate tax rate of zero, for the moment, with the future of the estate tax still up for grabs. The resulting uncertainty will hamper the efforts of charitable, educational and social organizations seeking major gifts and bequests from major donors.

Thanks to an unusual piece of Bush era tax legislation, the Federal Estate Tax rate, which has been decreasing for several years, is now zero for 2010. No matter how excited you are about this once in a lifetime (literally) estate tax planning opportunity, try not to die, at least until you have finished this post. If Congress does nothing, the estate tax will be back with a vengeance in 2011, when the Bush legislation expires and the higher taxes of the Clinton era come back to life (the dreaded Zombie Effect).

The House has already passed a bill extending the 2009 estate tax for 2010 (top rate 45% with first $3.5 million of each estate excluded from tax). The Senate is likely to consider adoption of the same approach, retroactive to January 1. Pro-estate tax forces in Congress have generally shown some willingness to compromise on rates and exclusions in order to get a tax in place for 2010. Opponents, who would like to repeal the "death tax" permanently, might be happy with the zero rate now, but even they want to get something done before 2011, when the Zombie Effect would produce a 55% top rate, with an exclusion of $1 million and new exposure of estate assets to capital gains tax. For now, some of the estate tax foes are playing hardball, confident that the Zombie Effect is not a serious threat, because it will be unpalatable to nearly everyone.

Why should you care about any of this if you are not wealthy, not planning to die within the next few years and not really into zombies? Estate tax planning drives a significant component of charitable giving. If your favorite school, environmental organization, or social justice institution hasn't already asked you to make a lifetime bequest of capital while reserving lifetime income under an annuity arrangement, it will someday. If you are rich enough and old enough to think about making this kind of gift, then you will want to understand the estate tax consequences. If the estate tax is up in the air, the estate tax consequences are unknowable. The result: worthy causes seeking major gifts and bequests will be hearing an awful lot of, "Let me get back to you once I know what's happening with estate taxes." Sustainable financing for even the most basic operations of some organizations could be jeopardized.

Today is not a good day to die, even for the estate planning fanatic. Today is a good day for Congress to produce serious estate tax legislation for 2010 and beyond. Don't let a showdown over the Zombie Effect bring charitable giving to its knees.

Can I major in comedy?

Forced to Pick A Major in High School - High school freshmen are forced to pick a major at Dwight Morrow High School, a public school in Englewood, NJ - a town with a mixture of mansions and poor areas near the George Washington bridge. Seems a little early to make a career decision. I'm still thinking about my own career choice, and I'm retired. Education experts are lining up loudly on both sides. Kids can be fickle. I attended a kindergarten graduation where the students were forced to announce what they wanted to be when they grew up. The first girl said artist and a class of twenty somehow produced fifteen would be artists. The Dwight Morrow plan could be great - the students get to choose and they end up structuring an academic program around something that interests them. If the major is just a focal point for broad training in analytical skills, Math and spoken and written English, why not? The student is in a position to change majors in high school or do something different in college or career with no harm done. If the major makes high school a little more interesting along the way - well, sounds like a plan. If the major is an early career decision that eliminates choices - disaster. Let's see what happens in real life before we take sides.

The same school features classrooms called Harvard, Yale and Rutgers in an effort to foster an academic track atmosphere. I can just see parents scheming as their kid finishes eighth grade, it's never too early to get into Harvard. Why no class named for MIT, Columbia or NYU? Dwight Morrow High won't get any donation from me.

Dwight Morrow was a senator and diplomat, the father of Anne Morrow Lindbergh, a noted Nazi sympathizer who was the wife of the famed aviator. I wonder if they cover any of this in History class? It might generate some interesting graffiti.