With the re-election of President Obama and the House of Representatives remaining in the hands of the Republicans, there are some pressing issues that must be addressed. One of which is the fiscal cliff. The situation is this, the tax cuts that were enacted by President Bush and extended under President Obama are set to expire on December 31, 2012. This includes income tax cuts as well as the current estate tax regime.
Congress and the President have known that this day was coming, however with the election upcoming, there was little appetite to get something done. Some commentators have argued that prior to the election; neither side was going to do anything that could negatively affect getting their respective bases out to vote. However, now that the election is over there may be more of appetite for compromise.
Further complicating the process is that there are large defense cuts set to occur in a process known as sequestration. The point of these mandatory cuts, were to encourage the parties to come to an agreement and avoid the drastic cuts. This may encourage a grand bargain.
Many estate planning attorneys and investment professionals have encouraged the government to provide predictability in the estate tax regime. Maybe now that the election season is over, that goal may be realized.