Dying in 2010, GRAT, and life support

I'm a reporter for the news Web site, msnbc.com, owned by NBC News and Microsoft, and a longtime reader of this excellent group. I'm researching an article about the subject of 2010 being a good year to die, in tax terms. You've seen articles on this subject. (Such as the flurry that followed George Steinbrenner's death.)

In researching another story, I ran across this online posting by an attorney, referring to a conversation with a CPA, and it raises a couple of questions:

(1) Would this indeed have been good tax advice, and

(2) Have you heard of any person or family who took this advice, as

2009 rolled into 2010? If there's anyone who did pass the New Year on life support, because of the tax advantages, or who put language to this effect in a health care directive (whether or not it ended up becoming necessary), I'd like to talk with that person's CPA and family for this story.

You can post here, of course, or contact me directly by e-mail at snipped-for-privacy@msnbc.com. My bio is at

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Regards, Bill

Reply to
bill.dedman
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One could also say that want life support removed on December/31/2010 because in 2011 the estate tax reverts to the 2000 levels.

There was talk of bringing back the estate tax in 2010 retroactive to the start of the year. But I haven't heard much about it since January. Now they're talking about extending the tax cuts (including the estate tax) for 2 more years.

Remember, when there is an estate tax, you pay a huge tax (up to 45% or 55%, I don't remember), but once the shares pass to your heirs, their cost basis is stepped up to the time of death or six months later (the alternative valuation date). OTOH, under the 2010 rules, you can step up $1.3 million of shares minus cost basis. That is, if you bought shares for $200,000 and they are now worth $2,000,000, you can step up the shares to $1,500,000. This means that when the heirs sell the shares, they will have to pay a larger capital gains tax. If they sold the $2,000,000 of shares right away, they would have capital gain of $500,000 and tax of 15% on this. But under the 2009, 2011 rules, they would have zero capital gain as the cost price of the shares is also $2,000,000 (as it was stepped up).

Reply to
removeps-groups

If taxes are that important to someone, it might well have been good tax advice. This issue might only affect a small number of people, since the exclusion in 2009 was $3.5 million.

Unless changed, the tax is slated to come back in 2011 with a $1 million exemption. So "finish me off before the new year" will be tempting for a lot more people.

I have not heard of anyone who actually did that. It seems to me that it would be a rare situation in which someone with sufficient wealth for it to make a difference would actually contemplate death within a relatively short period of time.

But I wouldn't be surprised if someone actually did it.

Reply to
Stuart A. Bronstein

Only after the exemption.

Reply to
D.F. Manno

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