March 01, 2012 Estate and Financial Planning

Basis Harvesting

Terence S. Nunan

People do estate planning for two reasons: to make certain their assets pass to their intended beneficiaries and to save taxes for their beneficiaries on and after their deaths. The recent passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (Tax Act), which provides a $5 million per person estate tax exclusion, has, for most upper-middle-class persons, made the second objective fairly easy to achieve. For most “ordinary” well-to-do persons, the need for more complicated estate planning devices such as qualified personal residence trusts (QPRTs), grantor retained annuity trusts (GRATs), and defective trusts would seem diminished in light of this $5 million exclusion. The last five years of federal estate taxation have been very unpredictable, and it is possible that the $5 million exclusion will be allowed to lapse in 2013. It seems more likely, however, that the exclusion will be retained.

Premium Content For:
  • Solo, Small Firm and General Practice Division
Join - Now