The federal estate tax expires at the end of the month -- but when it does, people who inherit a lot of money might want to hold off on spending it for a while.
Democrats are vowing to come back from their holiday break next year and pass an extension. And several key lawmakers say they'll make it retroactive.
The Senate today rejected a bill that would extend the estate tax for two months while Congress works on a more permanent solution.
The uncertainty is causing problems for tax planners. They say it's harder for elderly people to try to get their affairs in order.
This year, the inheritance tax is 45 percent on estates larger than $3.5 million. Smaller estates are exempt from the tax. So, that leaves less than 1 percent of all estates subject to the tax.
Under current law, the tax is supposed to temporarily disappear next year before returning in 2011 at an even higher 55 percent rate. But without an estate tax, many estates would be subject to a 15 percent capital gains tax -- which, under current law, they avoid.
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