Posts in Estate Planning
Beneficiary Designations Under Qualified Plans

The designation of beneficiaries under qualified plans, both a primary beneficiary and a secondary beneficiary, is an important part of a participant's retirement planning and estate planning. However, the rules relating to beneficiary designations for plans are often complicated and confusing. Click here for a paper from Foster Swift.

Comments from AALU on Estate Tax Debate

The estate tax remains in flux as key Congressional tax-writers have indicated that an estate tax resolution will not occur in the near future. However, recent developments around the Senate debate to increase the federal debt limit are pointing to a two-year extension of 2009 estate tax law ($3.5M, 45% rate) as a likely outcome.

In accordance with a deal struck by Senate Democrats and the Obama Administration, the Senate will likely adopt a pay-as-you-go budget measure under which the estate tax would receive a two-year exemption, meaning that revenue offsets would not be required for costs associated with an estate tax fix in that window.  This leads to the scenario highlighted above – a two-year patch of ’09 law most likely passed later this year as part of a larger tax package, perhaps under reconciliation instructions requiring only 51 votes. 

It remains unclear whether the law will be reinstated retroactively – Senate Finance Chairman Max Baucus (D-MT) agrees with retroactivity, but House Ways and Means Chairman Charlie Rangel (D-NY) continues to stand in opposition against retroactive tax increases.  Many scenarios for the estate tax remain on the table and are complicated by other legislative and political matters such as a health care compromise, a job-creation bill, and this year’s midterm elections. 

AALU is a trusted voice in Washington and we continue to work with lawmakers and our membership to come to a conclusion that is the most beneficial for you and the clients you serve.  

Washington and Estate Tax Reform

As follows are comments from AALU, the life insurance industry's lobbying organization, on Estate Tax Reform.

Despite efforts in the Senate to agree on a short-term estate tax extension, the inability to find a suitable legislative vehicle to do so amid the crush of controversial year-end business has lead to the likelihood of temporary repeal beginning January 1, 2010.  There has been some discussion of a retroactive reinstatement of the estate tax in early 2010, but exactly how and when that would occur remains unknown at this point.

While the House has already passed a permanent extension of 2009 estate tax law, pending a last-minute agreement in the Senate in the days ahead, lawmakers will be left with no options in dealing with this issue before December 31.

AALU has not wavered in our advocacy for permanent estate tax reform that includes reunification, portability, and indexing for inflation, and only in this rare lawmaking environment has this scenario occurred. We will continue to aggressively engage on this issue and communicate to you in the days ahead about further developments