Last year, Republicans released a study indicating that it would generate more revenue to repeal the estate taxe and treat inherited assets as capital gains. If the government implements this shift, estate planning clients and their beneficiaries could be negatively effected. Beneficiaries of deceased persons will now be taxed on inherited assets ifthere is a gain. In order todetermine gain, you have to determine the basis, which requiresdocumentation. If deceasedindividuals have no proof of the basis, and the gain cannot be determined, thenthe beneficiaries are taxed on all of the inherited asset.
In 2010, even when estate planning clients heardthat there was no estate tax, they were still subject to a transfer tax in theform of capital gains. Ultimately,there is going to be a transfer tax, it is just a question of the form that taxwill take.
See Jeff Reed, EstateTax Repeal?, ProducersWeb.com, Aug. 16, 2012.
Special thanks to Jim Hillhouse (ProfessionalLegal Marketing (PLM, Inc.)) for bringing this article to my attention.
