The 2010 estate tax screwup…. just listened to a local show with a tax person talking about the traps that Congress has put in place. With all the other 3000 page bills running around, one of the things that happened was that Congress let the Estate tax expire (as the Republicans intended a long time ago)…. but if Congress does nothing this year, the tax reverts to its pre-Republican high rates in 2011..
So if you’re worth a few billion dollars and have pancreatic cancer, you might want to die in 2010…. but more seriously, people with complex estate planning in place can really get socked if they don’t get their plans updated…. they mentioned it is common for people to set up “generation skipping trusts” where the surviving spouse is left an amount equal to the estate tax exemption. Since there is currently no estate tax, that means the surviving spouse would get nothing, and all of the money would pass to the grandchildren – not the desired intention.
It’s also unclear what happens if Congress does change the law when you’re part way through the process of settling the estate. Congress has a way lately of implementing retroactive tax changes when they fail to pass bills on time.
