To put it crudely, 2010 was the most favorable year for people to die. This year, the estate tax issue continues to remain in limbo, after having been allowed to lapse by Congress. Now with a markedly different face to Congress after the midterms, Los Angeles estate planning attorneys will wonder which way this issue will turn going forward.

The estate tax was repealed at the end of 2009, and is scheduled to return in 2011. If Congress fails to change the law and the estate tax returns, it will return to the previously unfavorable rates that were in place in 2001. Among other things, persons who inherit assets will have to calculate the value of the assets at the time of purchase of the assets, and not the value at the time of the decedent’s death. This will make it exorbitantly expensive for heirs to pay estate tax.

Among all the things that Republicans and Democrats are arguing over, none are bigger than tax cuts for the wealthy. The Republicans therefore want to make the 2010 estate tax rules permanent. That would eliminate estate tax. The Obama administration however wants to make the 2009 estate rates and tax exemptions permanent. Doing nothing would result in going back to the 2001 exemption and rates, a consequence unfavorable to many taxpayers. Most estate planning attorneys however expect that Congress will go back to the system that it applied in 2009. Retroactive taxes therefore, are highly likely.

So, what does all this mean for you? It's important to remember that estate taxes tend to apply to larger high-value estates. However, with all this focus on taxes, it’s definitely a sign that you should begin taking estate planning more seriously. Check that all your documents and papers are in order and that you have made it easy for your assets to be transferred to the persons or charities that you intend to leave them too.