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I just found this post over on the Tax Strategies board. If it's true, maybe things aren't as bad for folks with estates less than $1 million.

Author: criser Number: of 37505
Subject: Re: The cost of H.R. 8 Date: 7/14/00 11:34 PM

I'm trying to stay out of the debate about whether repealing the estate tax is good or not, since I'm an estate planning attorney and no one would believe that I was being honest whichever way I opined...

But I can clear up one apparent misconception.

HR8 does not entirely eliminate the step up in basis at death. It limits it to $1.3 million per person, plus there is a $3 million step-up for assets passing to a surviving spouse.

The way I assume the typical planning will happen is that, e.g., Dad dies in 2010, and would leave $1.3 million to a "basis step-up trust" and leaves the rest to Mom. $3 million worth of the assets passing to Mom gets a stepped-up basis. Mom dies in 2020 and leaves everything to the kids (or to a trust for the kids). $1.3 million of those assets get stepped up. So, plugging in some hypothetical numbers, lets say when Dad dies in 2010, the combined estate is $10 million, split equally between Mom and Dad, which has an overall basis of $5 million, also split equally between Mom and Dad.


intercst

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