In August of this year, the Joint Select Committee on Debt Reduction, simply referred to as the “Super Committee” was formed under the Budget Control Act of 2011 – legislation aimed at reducing the deficit by $1.5 trillion over the period of fiscal years 2012 to 2021. The deadline for the Super Committee’s proposal is less than two weeks away, November 23, 2011.
There are many rumors as to what the Super Committee may recommend for the estate and gift tax, if anything. Once the Super Committee makes a proposal, Congress will then have 30 days to pass the proposal as is, with only a simple majority vote required in both chambers to pass it. Thus, there is a chance that the gift and estate tax laws could change as early as a few days from November 23rd. Alternatively, if no Super Committee proposal is passed there will be automatic cuts totaling $1.2 trillion, including cuts to defense spending and Medicare.
As we await the outcome of the Super Committee’s efforts, we are are looking at the following courses of action for our clients:
- Accelerate use of the $5 million gift tax exemption, particularly those that leverage our historically low interest rates;
- Accelerate implementation of leverage strategies like GRATs, installment sales to grantor trusts, FLPs and FLLCs;
- Review of current estate plans.