Pennsylvania Estate Planning Lawyer & Attorney : Jakubik Law Firm : Serving Philadelphia, Chestnut Hill, Mt. Airy

The legal wrangling over gay marriage in California in recent weeks has gotten a lot of attention for potentially expanding or limiting the rights of gay couples.

But aside from the cultural benefits that are at stake and the precedent that will be set by the ultimate decision, relatively few stand to receive any financial benefits. Of the more than six million unmarried-partner households, just under 780,000 are gay, according to the Census Bureau. Of those, only 3% are in Massachusetts - the sole state where gay marriage is legal - and 14% are in California, where there's a good potential it will be legal soon.

"We kinda hear this stuff on the news and think these people are getting the same rights as married people, but that's so not the case," says Harlan Levinson, a Los Angeles-based accountant who warns that gay married couples can face a higher tax bill today than if they had remained single. "These people still need to have a living will, power of attorney and to sit down with an attorney or financial planner."

By and large, gay couples - and domestic partners in general - need to protect themselves proactively when it comes to their fiscal health. At the very least, a will, power of attorney and medical power of attorney should be in place, says Loreine Smith, a financial planner with Dallas-based firm Life Plan Strategies.

She also suggests couples make sure assets are titled properly and that arrangements are made for medical issues, retirement, child custody and estate planning. "It becomes very important in case one pre-deceases the other or in case they split up," says Smith. "If it's after the fact, there isn't a whole lot they can do."

Some tips on protecting yourself, regardless of how things play out in court and the legislative halls:

Health Care

More employers have begun extending benefits to domestic partners, but certainly not all. A 2007 Hewitt Associates survey found that 54% of firms offer coverage for domestic partners but only 32% offered benefits to both same- and opposite-sex couples.

If that is not an option, domestic partners should craft legal documents that designate a non-spouse beneficiary.

Partners should also seek out long-term care insurance and government benefits, says Ian Weinberg, a financial planner with Long Island-based Family Wealth & Pension Management. If one person does not have additional coverage, he or she can potentially tap into Medicare or Medicaid and supplement that plan with personal income.

Weinberg also warns against owning a home as joint tenants, because it allows the government to lay claims to the asset if either party is ill and needs government benefits.

"You have to segment out the emotional aspect of it versus the practical aspect," he says. "You want to say, 'We own this home in the Hamptons together; we own this home in the city together,' but technically it's not a good idea to have it set up this way."

Taxes

Even when gay marriage is a state-offered option, it packs a punch with taxes as long as the commitment is not recognized at the federal level.

"They're going to get hammered," says Joan Zawaski, tax director at San Francisco-based accounting firm A. L. Nella & Co., which filed about 60 returns for gay married couples last season.

Costs can be nominal or extreme, depending on the couple's financial position, but it's an important factor to consider. Those with large estates of $2 million or more have to consider hefty estate taxes that come with passing along assets to a non-spouse. Sharing more than $12,000 per year with a non-spouse will also face gift taxes.

For income tax, A.L. Nella found that gay married couples who both earned decent salaries posted higher costs than those with one primary earner. It's also more expensive to have the complicated returns prepared.

Estate Planning

Avoiding a will can be even more dangerous for domestic couples, since the partners don't have the same implicit rights as married couples.

"A lot of people don't like to think about wills," says Zawaski. "They don't like to think about the fact that they're going to die, but it's not fair to your partner or your children, if you have any."

Setting up a living trust with your partner as the beneficiary can ensure that assets will get distributed as intended in case of death. Creating a life-insurance policy in the partner's name can also keep some cash out of the taxable estate, Zawaski adds.

It's important to make sure documents are updated as situations and assets change over time. Having accurate legal documents limits the possibility that unsupportive family members will intrude on your last wishes. Levinson says brutal encounters can occur in court and otherwise if last wishes aren't made official.

"If there's intestacy, there could be a real hassle to disentangle this," he says. "When close relatives are not supportive off the relationship, it can be pretty ugly."

Tracking Down Experts

Partners should find tax, legal and estate-planning experts who have experience with their situation to make sure all aspects are given the proper consideration.

"All of these things have to be balanced very delicately because they all affect each other," says Weinberg.

Getting a referral from a trusted network of people can better ensure that the lawyer or planner is sympathetic and experienced with the situation.

It can be a long and frustrating process to hunt down professionals, pay the extra costs, pore through the paperwork, update information and make tough financial and personal decisions. However, its importance can't be overstated, especially for those with large assets or complicated situations that will require a roadmap in case of emergency or death.

"It's a pain in the neck," says Zawaski. "There are lawyers' fees to draw it up; you have to retitle all your assets. But once it's done, it's done."

Source for post: TheStreet.com

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As the author of a recent piece in Investment News notes, the three leading candidates for president - Republican John McCain and Democrats Barack Obama and Hillary Clinton - all support some degree of reform of the estate tax, though none support an outright repeal, which means that abolition of the tax will likely not survive as an issue after this year's presidential election. Each of the three candidates, however, has endorsed some form of reform plan, although the details of the proposals vary slightly.

Senator McCain's plan is clearly the most generous. The Arizona Senator is on record as supporting an increase of the estate tax exemption to $5 million, lowering the tax rate to 15%, and indexing the exemption amount for inflation. The two Democratic contenders, meanwhile, both have proposed essentially freezing the exemption amount ($3.5 million) and tax rate (45%) at their 2009 levels. Neither supports indexing for inflation. While clearly less taxpayer friendly than Senator McCain's proposal, the Democrats' plan is at least an improvement over the scheme that will be in place in 2011 under current law.

In short - repeal is likely dead for the foreseeable future, but some reform will probably be put into place after this fall's election.

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I have taken the comments below from the new edition of Estate Planning Journal, prepared by a connected, Washington D.C. attorney. I think these are reasonable, and represent the current consensus of planners who pay attention:

“Whatever the candidates say as to their campaign positions, economic and political realities will come into play when the new President takes office and must work together with Congress. Members of both political parties have an interest in avoiding the 2010-2011 train wreck. The Democrats do not want to allow even one year of repeal; it is very hard to put the genie back into the bottle. The Republicans want to avoid having the exemption return to a $1 million exemption level in 2011. Therefore, the prediction of a resolution before the end of 2009 seems sound, and it suits the needs of all parties.

Even if one of the Republican candidates becomes our 44^th president, it is very unlikely that the estate tax will be repealed. President Bush campaigned twice with repeal in his platform; however, once in office, the economic realities took precedence and Congress could not enact the repeal bill that President Bush sought. Although estate tax repeal has been included in the President’s budget proposals for years, including six years with a Republican controlled Congress, estate tax repeal will not be enacted due to its budgetary cost and competing demands on the federal purse. A new Republican President would not enjoy greater success on this issue. Compromise is really the only option now.

Congressional action in spring 2007 indicates that there may be significant support for a temporary extension of 2009 law. If there is a compromise that keeps the estate tax in place, there is a onetime ability to offset some of the cost of the increased unified credit with the revenue gain in 2010, the year for which current law provides for no estate tax. In a three-year extension of 2009 law, the first year is a revenue raiser, followed by two years in which there is revenue loss due to the change from a $1 million exemption to a higher exemption. A three-year extension would certainly be helpful, as it would eliminate the nonsensical one-year repeal, and would establish a fixed exemption level and rate. Nevertheless, a three-year fix is likely to add the estate tax to the package of tax provisions that is required to be the subject of periodic extender bills, and would do nothing to eliminate the current uncertainty that plagues clients and their tax advisors.

The rate considerations are more complex than the exemption level. Under pre-EGTRRA law, the top estate tax rate was 55%, but state death taxes were creditable. For an estate over $10 million, the state tax rate was 16%, leaving a real federal rate of 39%. Under present law, the applicable rate is a flat 45%. The net result—whether an estate is paying more tax or less—depends on state law…….

Dusting off my crystal ball, here is the prediction: If the Democrats win both the Presidency and control of both houses of Congress, the compromise will be to extend the 2009 rates and exemption level: a $3.5 million exemption and a flat 45% rate. If the Republicans win both the Presidency and control of the Congress, the compromise will be a $5 million exemption and a 35% rate. While the Republicans would prefer repeal or, at a minimum, lower rates (a la McCain), that would be too expensive in terms of revenue loss. If the Democrats and Republicans split control of the White House and Congress, the compromise will still fall within this range.”

Source: Will Doctor's Latest Updates

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OK, I couldn't resist. Reprinted below the fold is a post from a blog called Economic Trends by a fellow named Ed Morse, making the case, convincingly I'd say, that Warren Buffet's views on the estate tax are all wet. You can also read another critique of Buffet's views here.

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From Tax News comes the following hopeful repor that Congress may in fact do something sometime soon about the uncertain status of the federal estate tax. I will refrain from commenting on Warren Buffet's remarks here (but may well do so in a future post) - let us at least hope that Congress does SOMETHING soon to bring at least a little certainty and predictability to the tax considerations that go into estate planning. Here's the gbit from Tax News:

At a November 14 Senate Finance Committee hearing, Republicans and Democrats, in rare agreement, said that the current estate tax situation is a quagmire and needs to be fixed. The only question is how. With total repeal out of the question, Committee Chairman Max Baucus, D-Mont., put the question to his committee and a panel of tax experts, including two family business owners whose heirs could be forced to choose between selling the family business or going deep into debt in order to settle with the IRS.
Lawmakers and panelists also agreed that, in addition to the costs, the uncertainty associated with the future of the tax creates havoc with estate planning, as small business owners find themselves constantly adjusting their wills to accommodate new family members and shifting tax rates included in the Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16). "Complicated trusts often have to be created to deal with the moving target estate tax exemption," testified attorney and law professor Conrad Teitell. "And we have to draft for the contingency that there won't be an estate tax in 2010," he said. "Families must have multiple estate plans," agreed Baucus. "And that costs money."
Teitell, who has published a number of articles on the topic of taxes, wills and estate planning, noted that life insurance planning to pay for estate taxes and provide liquidity is also difficult. Indeed, constant estate planning has become a necessity in these uncertain times, according to Teitell. "Putting off decisions until Congress acts can be hazardous to your wealth," he quipped.
With panelists and lawmakers basically on the same page, the focus of the hearing quickly moved to where to draw the line - how big of an estate should trigger the tax. While many felt full repeal was justified, a straw poll appeared to settle on a figure of around $4 million, indexed for inflation. For his part, Baucus said that current congressional dynamics are such that he must wait until 2008 to begin looking at adjustments to the estate tax, but he told reporters following the hearing that major changes would come either in 2009 or 2010.
While the hearing was ostensibly dedicated to exploring the problems associated with the current estate tax laws, the star power of one panelist, business magnate and philanthropist Warren Buffet, proved too tempting for some lawmakers to ignore. Ranking member Charles E. Grassley, R-Iowa, asked Buffet to digress from the estate tax topic and give his opinion on taxing carried interest, an issue that Grassley admitted he remained undecided on. Buffet acquiesced, telling Grassley that he once served as a hedge fund manager and that he regarded it an occupation like any other and should, therefore, be taxed as such.
Grassley then turned to the question of tax-exempt charities and college endowments, asking Buffet whether he thought the current laws on charitable spending requirements should be changed. Buffet again acquiesced, telling the senior lawmaker that charities and endowments were no different than private businesses when it came to federal requirements and that they would use their funds as they saw fit. "It's institutional economics", said Buffet. "Require them to spend 3 percent of their donations on charitable purposes and that's what they will spend. Require 5 percent and they'll spend that." Flat-tax advocate Ron Wyden, D-Ore., inquired of Buffet his views on the subject. "I'm with you in principle," responded Buffet."But, it should be progressive."
By Jeff Carlson, CCH News Staff.

Source: Tax News

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So reports the Wills, Trusts & Estates Prof Blog:

Earlier on this blog, I discussed the uncertainty associated with the amount of exemption and the tax rate that will be applicable to non-exempt estates in the upcoming years.

According to Rebecca Knight, Facing up to the two certainties in life, FT.com, Oct. 23, 2007, this uncertainty has caused many Americans to experience an increased level of anxiety. Knight reports:

The survey, carried out by The Hartford Financial Services Group, found that most affluent Americans - particularly those with more than $2m in net worth - say they are more concerned than they were a year ago about their families having to surrender significant chunks of an estate to federal taxes.* * *

The top federal estate-tax rate on the biggest estates is 45 per cent until 2009, and will increase to 55 per cent in 2011.* * *

Compared with the sample average of 49 per cent that expressed greater concern about the estate tax, 73 per cent of Americans with $5m or more in assets, and 56 per cent of Americans with more than $2m in assets, said that their fears were increasing, the survey found.

The greatest concerns over the estate tax were: the respondents' increase in their net worth; the growing federal budget deficit that might imperil any estate tax cuts; and their sense that the new Congress is less likely to repeal or reform the tax.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

Source: Wills, Trusts & Estates Prof Blog

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The Wall Street Journal last week ran an article discussing the ways in which families and their advisers are trying to cope with the continued uncertainty with regard to the future of the federal estate tax. The article highlighted the continuing uncertainty about what form the estate tax will take in future years, especially with regard to the exemption threshold and the tax rate that will apply to non-exempt estates, and the planning challenges that accompany this uncertainty. As the author of the article suggests, the uncertainty primarily affects those holding assests valued between $1 million and $5 million, since the likelihood is that, whatever Congress ultimately does about the issue (if anything), those with estates worth less than $1 million are not lilely to be subject to the estate tax, and those with estates worth more than $5 million already are, and are not likely to see any permanent relief. As I have discussed here, tax planning is not the only, or even the primary, reason to put an estate plan into place. For those who fall into the $1 to 5 million tax netherworld, flexibility and cdreativity are the order of the day. Check out the article, and consult with your financial and legal advisers.

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What are the economic consequences, including the impact on government tax collections, of same-sex marriages? The tax laws in California are complex and too involved for publication in this blog. However, in an interesting article written a few years ago, several scholars at various universities collaborated in an article which begins an analysis of this topic by stating that:

It is well-known that a couple's joint income tax burden can change with marriage. Many couples, especially two-earner couples with similar incomes, pay a marriage tax because their taxes when married are more than their combined tax liabilities as single filers.

This feature of the income tax suggests that legalizing same-sex marriages would increase income tax revenues, because gay and lesbian households are thought to consist primarily of two-earner couples.

In this paper we estimate the income tax effects of allowing same-sex couples to marry. We use estimates on the size of homosexual relationships, the percent who would marry if same-sex marriage becomes legal, and the average incomes of these couples, in order to generate estimates of the revenue impact.

Our calculations indicate that legalizing these marriages would lead to an annual increase in federal government income taxes of between $0.3 billion and $1.3 billion, with the likely impact toward the higher range of the estimates.

Source: California Tax Attorney Blog

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Courtesy of Mitchell Port of the California Tax Attorney Blog comes a nice Q & A from the IRS that addresses many of the fundamentals of trust law and trust taxation. Like Mitchell, I believe that any good attorney practicing in this area knows the answers to these questions. Nonetheless, I think that the information is of use to most non-trusts and estates practitioners, as well as our clients, and I urge you to take a look at the IRS publication to which Mitchell links in the below post:

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From the American Bar Association's RPPt Section eReport comes the news that Congress may enact legislation that would refuse patent protection to tax planning methods. I have previously posted on this issue and, as those whom read my earlier post may recall, I believe that allowing patent protection for tax planning methods is nothing short of silly, and I wholeheartedly support legislation disallowing such patents.

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The clock is ticking for Congress to show a backbone and put in place a permanent solution to the estate tax. Until then, tax planning for individuals is a mess of “what ifs” and looking for an oracle to determine which year we will die in. The latest attempt to clean up the mess created by the Economic Growth & Tax Relief Reconciliation Act of 2001 is HR 3170, currently pending in Committee in the House of Representatives.

HR 3170 would continue to increase the estate tax exemption in smaller increments from the $3 million mark in 2009 up to $4.75 million in 2014. The rate of tax would be linked to the capital gains rate, 15% until 2010 and then 20%. The deduction for state death taxes paid would be eliminated in 2010. And in an interesting move, the Executor of the first spouse’s estate could “give” any unused estate tax exemption to the surviving spouse. This would have an interesting impact on families that for some reason would prefer to not equalize estate values for tax planning purposes.

Who knows how far this Bill will get. Hopefully some meaningful resolution on the estate tax is not far off, although it could easily go unresolved until after the next presidential election.

Source: Connecticut Medicaid and Estate Planning blog

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Joel Schoenmeyer over at Death and Taxes has published an interesting post that asks some interesting questions about the tax implications of celebrity autographs and the like. Joel's post raises slightly different issues than my recent post about the possible tax implications of, for example, catching Barry Bonds' 756th home run ball, but the questions are somewhat related and no less interesting. Last weekend a friend of mine was lucky enough to attend Cal Ripken's induction into the baseball Hall of Fame, and was even more lucky to get Cal's autograph. Suppose my friend had had Cal sign a cap or jersey that Lou Gehrig, whose record for consecutive games played Ripken broke, had actually worn. Would that autograph add value to the memorabilia in excess of the $12,000.00 annual gift tax exclusion? Probably. Would the IRS experience a black eye bigger than what it suffered after the McGwire home run ball fiasco discussed in my earlier post? Absolutely. Are we likely to ever see the day when the IRS treats celebrity autographs as taxable gifts? Not very.

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I would be remiss if I did not point you to the final installment of Joel Schoenmeyer's excellent 4 part post on the gift tax. Without further ado or embellishment, here is part four:

A final word...

16. I've tried to give a number of practical hints on gifting over the years, focusing on things that can be done without an attorney. That being said, there are a lot of gifting situations that simply require the assistance of a professional, and maybe more than one professional:

-you are making gifts of a future interest

-you are making gifts that exceed the $12,000 annual exclusion amount

-you are involved in non-traditional gifting relationships -- loaning money to a child, selling property to a child for less than its fair market value, naming a child as a joint tenant, etc.

-the property being gifted has valuation issues. Obviously it's easy to figure out the value of a gift of $10,000 in cash -- it's $10,000. But what about assets like real estate, or a painting, or a minority interest in a partnership? These are far trickier, and the IRS is far more diligent about auditing in these cases.

Source for post: Death and Taxes

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A couple of weeks ago I shared with you the first couple of posts in a four part series that Joel Schoenmeyer had done at the Death and Taxes blog on the federal gift tax. Here is part 3 of Joel's informative discussion:

11. The last major credit or exclusion from gift tax is called the "unified credit." It's found in Section 2505 of the Code.

12. The unified credit is currently $1 million, which means you can give away up to $1 million during your lifetime without owing gift tax. Note that this credit works in tandem with the annual exclusion amount. So, for instance, if you gave $100,000 to your daughter in 2007, you would get the $12,000 annual exclusion, and your unified credit would be reduced by only $88,000 (100 - 12).

13. The unified credit used to be, well, unified -- it was tied to the estate tax credit. In other words, there was one credit amount, which could be used during life or upon death.

14. In cases where you make gifts that exceed the annual exclusion, you'll still need to file a gift tax return, even if no gift tax is due. This is so the IRS can keep track of (and potentially challenge) the amount of your unified credit remaining.

15. With all this in place, would anyone ever need or WANT to pay gift tax? I don't know about "want," but in cases involving high net worth individuals, it may be better to make gifts now, and pay gift tax instead of estate tax. Obviously you lose with respect to time value of money (it's better to pay tax later rather than sooner), but you gain a couple of ways:

-You get property and its future appreciation out of the estate. The $1 million you give away today may be worth $2 million (or $3 or $10 million) when you die.

-The estate tax is calculated on the total value of the decedent's estate, including the money being used to pay the estate tax. That's not the case with the gift tax.

Source: Death and Taxes blog

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Yesterday's Wall Street Journal had an interesting article about the possible tax consequences to the poor schmoe who catches Barry Bonds' presumably soon to come record breaking home run ball. The question is whether the lucky spectator who grabs the ball is liable for tax on the value of the ball, and if so, when any tax would become due. The IRS isn;t commenting on the matter - and appears to have no intention of issuing a tax bill - evidently still suffering from the adverse publicity it received the last time there was a home run of consequence. When, during Mark McGwire's pursuit of Roger Maris's single season record, and IRS official was asked what would happen if the fan who caught the record breaking ball returned it to Mr. McGwire, the official stated that the poor fan would face a hefty gift tax bill. After a deluge of criticism, the IRS issued a statement to the effect that, under the circumstances suggested, there would be no gift tax bill. But there are a lot of unanswered questions. What if the ball catcher gifts the ball to the Halon-profitl of Fame, or a charitable non-profit? What if he or she gives it to one of their children, or someone else? What position will the service take? What if Bonds is indicted after the season ends, and the ball becomes worthless? Interesting questions all. Tax isn't ALWAYS dull.

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One of the more absurd developments in the tax planning arena during recent years has been the move by some practitioners to obtain patents for certain tax planning strategies. If successful, the applicants would be in a position to prohibit other practitioners and their clients from making use of the patented strategies - some of which, while creative, do not rank as discoveries along with penicilin, the computer microchip or a blockbuster pharmaceutical - or force them to pay royalties for using particular strategies. Congress, for once, appears poised to re-introduce a dose of sanity. It has been reported that the House Judiciary Committee approved an amendment to the Patent Reform Act that would essentially put a halt to this silly practice. Here's hoping that common sense, and the Boucher-Goodlatte amendment, prevails.

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As mentioned in my last post, Joel Schoenmeyer, of the Death and Taxes blog, has put together an outstanding multi-part post on the gift tax. Here is the second part of Joel's excellent gift tax primer:

6. The gift tax is NOT a tax that applies on each and every gift you make. Rather, there are a number of credits or exclusions that a taxpayer can rely upon to avoid the tax.

7. One of the simplest of these can be found in Section 2503(e) of the Internal Revenue Code (the "Code"). It's the "Ed Med" exclusion, which exempts the following from gift tax:

any amount paid on behalf of an individual— (A) as tuition to an educational organization... for the education or training of such individual, or (B) to any person who provides medical care...with respect to such individual as payment for such medical care.

"Educational organization" and "medical care" are both defined elsewhere in the Code. One important point: the payments have to be made directly to the educational organization or medical care provider -- payments made to Daughter to reimburse her for these payments, or made to Grandson to be used for such payments in the future, don't count.

8. There's also an "annual exclusion" from gift tax -- you can give up to a set amount ($12,000 this year, but it changes with cost of living) to as many individuals as you want without any gift tax implications. That means 12K to each child, to each grandchild, to each niece or nephew, to each person listed in the Chicago telephone directly, all with no gift tax. You don't even have to file a gift tax return for these gifts.

9. One wrinkle to the annual exclusion discussed above (which can be found in Section 2503(b) of the Code): it only applies to gifts of a "present interest." In other words, if you give $12,000 to Grandson in a cash he can use right now, you qualify. If, instead, you give $12,000 to a trust for Grandson but he can't access the money right now, you don't get to use the annual exclusion for that gift. Obtaining the annual exclusion for gifts to a trust is what's driven the use of crummey trusts, which I blogged about here.

10. A husband and wife who both want to make gifts can elect to "split" their gifts. Let's say that my wife and I want to give $24,000 to each of our children. If I write a check for that amount from my own account, and get my wife's consent on a gift tax return we file, then the gifts will be treated as having been made one-half ($12,000) by me and one-half ($12,000) by my spouse. We both get to use our annual exclusion. The split gifts provision is in Section 2513 of the Code.

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The Death and Taxes Blog - in my opinion one of the finest, if not THE finest - trusts and estates blog anywhere, has run a very interesting and informative two part post on the federal gift tax. This is one of the more confusing topics involved in the family wealth planning area, and Joel Schoenmeyer, the publisher of Death and Taxes, is to be commended for doing such a fine job. You can read part I of Joel's two parter on the gift tax here.

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Since the day President Bush signed the Economic Growth and Recovery Act of 2001 into law, speculation about the future of the federal estate tax has been a favorite parlor game of estate planners, financial professionals and others with skin in the game. As you likely know, the 2001 act provided for staged increases in the federal estate tax exemptions, culminating in a complete repeal of the tax for the year 2010, and then a re-imposition of the pre-act $1 million exemption in 2011. Most take it as a given that those with sufficient assets to worry about whether the repeal is or is not made permanent most likely would benefit from a permanent repeal. I happen to share this view (although I do not believe that tax savings are necessarily the primary concern in estate planning, about which you will see much more here in the future). Not everyone, however, shares this perspective.

Justin Parr, writing on Lightship Mutual's blog, The Daily Compass argues here that a full repeal of the estate tax would actually negatively impact more people than it would benefit, as a repeal would eliminate the rule that provides that heirs receiving property at the transferor's death take the property with a stepped up tax basis to the fair market value of the property as of the date of death. With repeal, Parr asserts, the normal gifting rules would apply, with the recipients taking the property at the transferor's basis, and subject to capital gains tax if the property has increased in value.

Parr may well be right on the technical issue (although, if Congress were to do the right thing and make the repeal permanent, it remains to be seen how the legislation would be written and how, or even whether, the tax basis issue would be addressed), and he is certainly right that arguments can be made on both sides of the moral question of the propriety of death taxes. It would appear that Mr. Parr would disagree with me that repeal of the estate tax is the right thing to do, from both a moral and policy perspective. Where we would agree, however, is that the uncertainty that Congress created with the one year repeal makes proper planning especially challenging and confusing for clients. For that reason, if for no other, Congress should resolve once and for all the issue of what will happen with the estate tax after 2010.

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