Yes, Virginia, there is an Estate Tax
According to Investment News, Virginia became the first state to pass a law requiring that estates be treated as if it is still 2009 -- unless Congress acts first.
Why would Virginia do that? Many wills include formulas that are based on the existence of an estate tax. This article points out how the formulas can distort the intentions expressed in someone’s will - - to the extent of leaving one’s children nothing instead of $3.5 million.
Of course the issue does not apply at all to most estates because they are too small to be taxed in the first place. There was no tax on small estates in 2009, and there is none in 2010.
In our practice, for estates that might have been taxable, we have been using “disclaimer” provisions that allow a surviving spouse to decide whether tax-minimizing steps are necessary. The “disclaimer” technique is not a cure-all for an uncertain tax environment, but it works in many cases.
It would be better if Congress simply decided to end the uncertainty and pass some kind of estate tax law.
