States Struggle to Deal with Congress's Shameful Estate Tax Mess

States Struggle to Deal with Congress's Shameful Estate Tax Mess


The Year Without an Estate Tax continues.  

As I have previously written, due to Congress's extreme irresponsibility and inability to get anything done at all, the Estate and Generation Skipping taxes are repealed in 2010, but for one year and one year only.  Last December, in a post entitled, The Real Danger of the Expiring Estate Tax: Existing Documents, I discussed that the biggest concern among estate planners is that none of the documents that we've been drafting for clients make any sense.  They don't "work."

The problem is that the dispositions of property in the documents are often worded in such a way that they take the estate tax into account.  Take a look at the following examples that might be found in an existing Will or Trust:
  1. "I give to my children an amount equal to my remaining estate tax exemption, and give the balance of my estate to my spouse."
  2. "I direct that my Personal Representative set aside an amount equal to my remaining generation skipping tax exemption, and said amount shall be held in trust for my grandchildren."  
  3. "I give to the United Way the minimum amount necessary to reduce my estate tax liability to zero, with the remainder of my estate to be equally divided among my children."
If there is no estate tax, then if each of the above formula dispositions are literally followed, then they will result in a disposition of the estate that the testator did not intend.

 
David Shulman is an attorney located in South Florida who focuses his practice on Wills, Trusts and Estates, and Tax Planning. He attended George Washington University Law School and Brandeis University, both of which he graduated with honors. In addition David received his LLM in Estate Planning from the University of Miami Law School. Prior to starting his own practice, David worked for the Internal Revenue Service and a large South Florida law firm.