Alexandria, VA Estate Planning Blog

Wednesday, July 14, 2010

Dying In 2010 May Be The Most Expensive Thing You Have Ever Done

Stop! Don’t pull the plug just yet?

All individuals need to educate themselves as to the realities of the estate tax in 2010. It may be prudent to consider nominating an agent in their healthcare power of attorney or living will, for the year of 2010, who is not a potential beneficiary to their estate.

Since the death of billionaire George Steinbrenner, many television broadcasters and radio hosts have instantly realized their own preeminence as estate tax pundits. Unconstrained by prudence, they have opined on the wonderful tax benefits of dying in 2010.

Death never sounded so good. However the benefits aren’t so clear. Consider these three points:
a) Dying in 2010 may not result in estate tax avoidance.
b) Dying in 2010 may increase capital gains taxes for your beneficiaries.
c) Dying in 2010 may disrupt your dispositional scheme. 
Congress has the authority to pass a retroactive estate tax, which would impose an estate tax on persons dying in 2010. Many learned individuals have concluded that such legislation, if passed this year, would survive a constitutional attack.
What a terrifying thought. Having your assets subject to a 55% tax (or greater) and not being able to plan around it.
Estate planning attorneys implement strategies designed to shield many millions of dollars from the estate tax. The key word is plan. An estate planning attorney cannot plan with certainty around the tax rules of today, if the rules will not be known until tomorrow.
Don’t let the current climate of misinformation and uncertainty lull you into inaction. There is still much that can be done. The climate should motivate you to act and compel you to action. The tax consequences of inaction and complacency can be catastrophic.

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