There has been a lot of talk this year about the estate tax; particularly, about the one-year-only repeal of the tax that took effect for 2010. Uncertainty has prevailed all year on this topic, and not much has changed.

The future of the estate tax rests in the hands of Congress. If Congress doesn’t do anything, then the tax will return starting January 1, 2011. When it comes back, the maximum estate tax rate will be 55%, and the exemption will be $1 million. Compare this with 2009, when the rate was 35% and the first $3.5 million of any given estate was exempt from taxation.

The one thing we know for sure is that Congress won’t do anything until after the summer recess, meaning that there won’t be any legislation on this subject until mid-September at the earliest. Some experts think that there won’t be any action until after the elections, meaning that the uncertainty will continue until very close to the end of the year.

What about the chance of a retroactive estate tax for the year 2010? This was a big concern at the beginning of the year and, although it’s always a possibility, most experts seem to think that the longer Congress waits to take action, the less likely a retroactive 2010 estate tax will be. Of course, Congress can always do whatever it decides.

So, where does all this uncertainty leave us? Anyone who has a net worth of $1 million or more – and this includes the value of your home, your investments, and your life insurance policies – should consult with an estate planning attorney about the need for tax planning.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Although the estate tax is currently in limbo, experts don’t expect the free pass to last long. When Congress failed to act in 2009, the estate tax effectively fell off the books as of January 1, 2010. That means that if a loved one dies this year, the estate will not be taxed.

But unless Congress takes action, the estate tax is set to renew in 2011 with a much smaller exemption amount of $1 million.

What does that mean for you?

When a person passes away, it is the responsibility of the estate executor to come up with the net worth of the estate and paying taxes on any amount above the exemption.

Estate taxes are due nine months after the death of the owner and since taxes can only be paid with money, executors often find they must sell estate property, take out a lien on property or use life insurance money to pay any applicable taxes.

Whether or not this will affect your estate of course, depends upon its value, but remember that many people are surprised to discover that their estate is worth quite a bit more than they had estimated. To prepare for the return of estate taxes, you should consult with a qualified estate planning attorney.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.