I've been to a few lectures this year where attorneys and tax professionals, like me, are looking for the answer to what will happen with the estate tax this year and beyond. We're unsettled because none of our expectations has come to pass--we're left with no estate tax, for this year only, and instead have a step-up in basis for capital gains limited to $1.3 million per estate, and $3 million for assets passing to a spouse. And next year, we're back to a (now small) $1 million estate tax exemption.
There were many ideas about what legislation Congress would pass to avoid this result, but none have yet passed, and the longer this drags on, the less likely a solution will come until after the November election this year. Here's an article in Forbes that discusses it further.
In the meantime, the language in most trusts needs some patchwork to make it work well. I know that very few of us plan on dying this year, but just in case, have your attorney review your trust and prepare a short amendment to "2010-proof" your trust. Trusts are structured differently, so a one-size-fits-all amendment won't work, but the amendment that fits your trust shouldn't be too complicated.
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