New law poses challenges for estate planners by Robert Mathers, president and CEO of the wealth management subsidiary of Milwaukee-based Clifton Gunderson LLP.
While most people welcome the 2010 repeal of the federal estate tax, there is a little-known catch to the legislation. Here is an overview of the new “catch” in the law (the so-called modified carry-over basis):
- Estates of decedents dying in 2010 are able to step up the basis of assets transferred, but only to a $1.3 million limit.
- The basis of property transferred to a surviving spouse may be increased by an additional $3 million, or $4.3 million in total.
- The basis may never be adjusted above its fair market value on the date of the decedent’s death.
- The executor elects which assets receive an increase in basis and the extent to which each asset is adjusted for each beneficiary.
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