Executors Face Difficult Decisions Under the New Tax ActMarch 18, 2011 – Articles The Legal Intelligencer
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extends most of the so-called “Bush era tax cuts” into 2012. The 2010 act increases the unified exemption for decedents dying in 2011 or 2012 for estate tax purposes to $5 million and reduces the top estate tax rate to 35 percent.
Executors of estates for decedents dying in 2010 face a special burden imposed by the 2010 act. Such executors must first decide whether to elect out of the imposition of the estate tax after a thorough analysis of both the estate and income tax consequences of such an election. The decision to elect-out of the estate tax results in additional problematic decisions that must be made with respect to the allocation of basis among estate assets.