After a bit of biding our time, we finally have something official with which to work regarding 2010 estate taxes. Nevertheless, there is a bit more waiting to do. The IRS recently published its guidance in the form of Notice 2011-66 and Revenue Procedure 2011-41.
As you may recall, 2010 was a uniquely advantageous year for decedent’s estates. Yet, in many ways, it was a uniquely stressful year for estate tax planning. Most of the wealth transfer taxes lapsed after the inaction of Congress the previous year, until last December’s tax compromise that is. This compromise set the transfer taxes back in place, retroactively for the entire past year (i.e., 2010). With taxes both in effect and not in effect by various laws, the December compromise left it to individuals taxpayers to decide between paying estate taxes or not paying estate taxes. Consequently, much of the chatter on the issue has been debating which path to take (since it’s not actually as obvious as one would think). Now, resolving that tax dilemma is less hypothetical since Notice 2011-66 explains how to opt out of the estate tax and Revenue Procedure 2011-41 explains the special tax rules that will go into effect if you do opt out.
Hani Sarji has offered up a helpful piece on his Forbes-based blog explaining the developments in detail, along with the pros and cons. He also provides several helpful tables of information to help you navigate this issue.