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KAI RYSSDAL: Estate planning is about to get a lot more complicated for this country's wealthiest families. The federal tax on large estates is set to expire at midnight tomorrow night. A not-too-close reading of the tax code thus presents this dilemma: If a rich person dies tomorrow, almost half of their wealth will go to the Internal Revenue Service. If they can hang on till Friday, the heirs will be a lot richer. Maybe.
Our New York bureau chief Amy Scott reports now on the not quite death of the death tax.
Amy Scott: Harold Apolinsky knows how he'll be spending New Year's Eve.
Harold Apolinsky: I will be the one really shouting when the ball with the Waterford crystals hits the bottom.
Apolinsky is an estate planner in Birmingham, Ala., and he's one of the original crusaders against the estate tax. His wish for repeal is about to come true, temporarily. The 45 percent tax on estates bigger than $3.5 million dollars expires tomorrow. Then a year later it will return at a higher rate.
Roberton Williams: No one expected this to happen, and it's really shocking.
Roberton Williams has been following the long estate tax debate as a fellow at the Tax Policy Center in Washington. In 2001, Republicans passed a law phasing out what they called the "death tax." But they failed to make the repeal permanent. With Democrats now in control, most expected Congress to extend the tax into next year.
But Williams says lawmakers had other things on their minds.
William: I think that the Senate was so tired after battling over the health bill, that they just couldn't get their heads together to do something, even temporarily, about the estate tax.
Estate planners say the lapse is raising some tricky questions for wealthy families. Jonathan Rikoon heads the trusts and estates practice at the law firm Debevoise & Plimpton. He says families may have been wondering how long to keep a loved one on life support.
Jonathan Rikoon: I think that would be a mistake. It's my view that the best interests of the patient don't necessarily include minimizing taxes.
For one thing, Rikoon says Congress will likely reinstate the tax in the new year and make it retroactive to January 1.
In New York, I'm Amy Scott for Marketplace.