Friday, January 22, 2010


The answer is YES. Congress in 1987 amended a deduction allowed in the 1986 estate tax law, which caused a deduction against the estate tax taken by an estate executor to be disallowed after he had already taken it.
The U.S. Supreme Court in the case, United States v. Carlton, 512 U.S. 26 (1994), ruled that the 1987 amendment's retroactive application to Carlton's 1986 transactions did not violate his due process rights in the U.S. Constitution.
For decedent's passing away in 2010, the repeal of the estate tax (which is just for 2010) sounds great. But, most observers, including myself, think that Congress will amend the law taking away the repeal and replacing it with an estate tax with some kind of deduction. What that will entail is anyone's guess.
Trustees and executors of estates for persons who pass away this year should carefully consider the size and nature of the estate, consult with their C.P.A. and see their Estate Planning Attorney. It may be advisable in some cases to only make a partial distribution, and to hold back a reserve of funds against a possible estate tax caused by a retroactive amendment.
The strategy taken may also include filing a 706 Estate Tax Return and claim zero tax. But, no one should rely on this as "bullet proof" against Congress deciding to take away the Estate Tax Repeal.
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This blog is intended for informational purposes only and is not intended to be a substitute for legal advice from an qualifed Estate Planning Attorney in your jurisdiction.

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