On August 2, 2011, the Budget Control Act of 2011 (the “Act”) created the Joint Select Committee on Deficit Reduction (the “Super Committee”), a 12 member bipartisan select Congressional committee tasked with reducing the federal deficit by at least $1.5 trillion on or before 2021. The Super Committee is supposed to be making its recommendations to achieve this goal to Congress on or before November 23, 2011. Congress is supposed to vote on the recommendations by December 23, 2011, by an “up-or-down” majority vote in each chamber. If Congress can’t agree on the proposed bill, the Act will trigger automatic spending cuts.
Given that the President’s Plan for Economic Growth includes a rollback of the estate, gift and generation-skipping transfer (“GST”) tax exemption levels back to 2009 levels ($3.5 million for estate and GST tax and $1 million for gift tax), it is possible that the Super Committee’s plan will include a reduction of the current $5 million exemption levels. While the content of the Super Committee’s meetings has not been made public, few practitioners believe that the current $5 million exemption amount will survive its currently scheduled December 31, 2012 sunset. In fact, there has been a great deal of speculation that the Super Committee will decrease the gift tax exclusion amount from $5 million to $1 million at the end of next month (December 31, 2011), or, possibly, as early as November 23, 2011, when they present their plan to Congress.
To download a PDF copy of our guide on how to respond to this reduction, click here.