Executors Struggle with the Estate Tax Lapse

While some people complain about billionaires cheating the IRS by dying during the federal estate tax lapse, the reality is that billionaires aren’t getting the cut-and-dry billion-dollar windfalls that are discussed.  The repeal is creating new headaches for executors as they struggle to get heirs the best outcome.  Some of the issues executors face include:

• Executors have no guidance regarding QTIP trusts and whether the benefit of the estate tax lapse can be passed on when the spouse dies.
• Executors don’t know if they can use QTIPs to defer estate tax liability this year.
• Executors aren’t sure how the step up in basis and spousal exemptions of QTIP trusts will work this year.
• Executors have no way of knowing what Congress is going to do, and they probably won’t get any answers until after the November election.

See Scott Martin, Marital Trusts May Block Steinbrenner and Kluge Heirs Reaping Billions from 2010 Estate Tax Loophole, The Trust Advisor Blog, Sept. 25, 2010.