Estate Tax Planning Slowed By IRS Delays

Estate planning sometimes follows the loss of a loved one, adding to the difficulty in making important decisions. When there are governmental delays in sending out required estate tax forms, it essentially puts the state of estates in limbo. Such is the case for a Florida woman, who is confronting the necessary estate tax planning for the multi-million dollar estate of her late husband.

The Florida woman lost her spouse in early 2010. Together, the couple shared an $8 million dollar estate, but she is concerned over how much she will have left once she pays estate taxes to the IRS. For 2010, estate beneficiaries were offered more options than in years past, options that raised as many questions as answers.

With the changes to estate tax law, estates for 2010 have two options when it comes to paying their estate taxes. Estate taxes can be either paid in a one-time process or opted out of with the taxes paid subsequently through capital gains. The caveat behind opting out means that beneficiaries and heirs may see greater costs in capital gains taxes when it comes to liquidating assets such as property or stocks.

The big question concerning estate tax planning is, “what option is going to cost me less?” To help heirs and beneficiaries, the IRS was supposed to publish a “cost basis” form to help estimate how much they will have to pay in capital gains taxes. While the IRS program appears to hold promise of potential savings for those dealing with estate taxes for 2010, the little wrinkle to date is that the IRS has yet to publish this critical form.

This Florida woman was initially advised to wait on her final decision until Congress finds a permanent solution for estate taxes. Other Florida residents caught in similar conundrums would do well to consult with an estate or probate attorney to assist in investigating and making important decisions relative to their individual estate tax planning process.