The not so funny standing joke in the estate planning business is that the most lucrative plan would be a plan to die in 2010.

The meat behind that joke is, of course, the estate tax revision law that was was passed not long after Bush took office that started reform of estate tax laws in the right direction but had a twist in 2010 that made no sense then and far less sense now. The idea was to raise the limit of the exemption over the years so that increasingly larger portions of estates would not be taxable. Back when the law was passed the exemption was a piddly $600,000. Everything over that estate value was taxable at exorbitant rates.

Over the years it has been raised to the current 2008 level of $2,000,000 and in 2009 it is due to be raised to $3,500,000. The twist and the reason that 2010 would be a “good time to die”, is that unless congress does something to change the law currently on the books, the estate tax would disappear completely for one year. No exemption needed because there wouldn’t be a tax.

Then the next stupid twist in store for those who have truly been trying to plan for and protect their estates would happen in 2011 when the exemption would return to the 2001 level of $600,000. This has been a nightmare for accountants, attorneys and anyone who has been trying to protect their estate with survivorship or second to die life insurance. This has been an especially expensive shell game since most survivorship policies are funded with universal life or whole life policies. The target keeps moving.

Most of those willing to bet on this are saying that they believe congress will vote to extend the 2009 exemption through 2010 to give them time to come up with a permanent plan. The law has gone a long way in the right direction and no one can afford to have it disappear and no one can fathom it returning to 2001 levels.

Bottom line. Starting with the 2009 exemption level of $3,500,000, expect for congress to find some way to periodically increase it. In 2001 $600,000 wasn’t fair and I think it is fair to assume that in 2020, $3,500,000 won’t be fair.