Suggestions for Estate Tax Planning

A recent Forbes article about the uncertainty of the estate tax covers many of the problems previously discussed on this blog and adds a couple of interesting points to the discussion:

• Because of changes to capital gains treatment, individuals passing away this year may force the executor of their estate to allocate a limited amount of step-up in basis among estate assets.  The article suggests reviewing wills and appointing a non-heir as the executor in order to avoid potential conflicts of interest when making step-up in basis decisions.
• If a spouse is in failing health and not expected to live beyond 2010, the article suggests that the other spouse consider making gifts to the sick spouse. A gift between spouses is not subject to the gift tax and if the spouse in failing health dies in 2010, that spouse’s estate will not be subject to an estate tax.  Of course, this strategy is risky because a retroactive estate tax is still possible.

See Ashlea Ebeling, How To Protect Your Family From Estate Tax Uncertainty, Forbes, May 6, 2010.