Bay Area Wills, Trusts & Probate Report

Will Billionaire Dan Duncan's Estate Pass Free of Federal Estate Tax?

Professor Gerry Beyer (Wills, Trusts & Estates Prof Blog) links today to Scott Martin's post, Billionaire's Heirs First to Win 2010 Estate Tax Jackpot on The Trust Advisor Blog.

Dan Duncan is the first billionaire to die during the repeal of the federal estate tax.  Prof. Beyer notes:

If Congress reinstated the death tax for 2010 and made it retroactive for the year, Dan Duncan’s estate would generate up to $4 billion for the IRS. Although this seems to be a strong incentive for Congress pass a retroactive reinstatement, The Trust Advisor Blog predicts that Duncan’s death will actually have the opposite effect.

Will Congress retroactively restore the federal estate tax for 2010?  Scott Martin proposes that the deaths of individuals leaving large estates make it less and less likely that Congress will reinstate the estate tax for 2010:

. . . probate gurus say the sheer amount of money on the table makes a retroactive tax more unlikely. Big estates mean big lawyers ready to fight to see those billions of dollars go to the deceased’s heirs, and the headaches could go on for years. 

Planning an estate under the current 2010 rules (no estate tax; modified carryover basis rules) differs significantly from planning an estate if there is an estate tax and "traditional" basis rules.  As things currently stand, I draft estate plans to work under the current 2010 rules and at the same time build in flexibility in case Congress restores the estate tax for 2010.  Many estate planners are taking the same approach.

Congress has returned from its recess -- and I have returned from my blogging break. 

I'll keep you posted.

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Comments (1) Read through and enter the discussion with the form at the end
David Shulman - April 13, 2010 1:05 PM

It's amazing that when clients ask me the question, what's going on with the estate tax, I have no answer for them.

I'm starting to think more and more that Congress will do nothing and we'll go back to $1 mil and 55% next year.

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