Hedging Death and Taxes

The repeal of the estate tax in 2010, with the concomitant phase-out over the intervening years, poses a paradox for planners:1 The tax will strike unevenly depending upon the year of death. A person dying in 2004 will have a significantly larger estate tax liability than someone who dies during 2009. For example, a $5 million estate will owe about $1 million more in estate tax if the individual dies

The repeal of the estate tax in 2010, with the concomitant phase-out over the intervening years, poses a paradox for planners:1 The tax will strike unevenly depending upon the year of death. A person dying in 2004 will have a significantly larger estate tax liability than someone who dies during 2009. For example, a $5 million estate will owe about $1 million more in estate tax if the individual dies five years sooner. (See “Hang in There,” page 59.)

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