Surprise, surprise! Congress still has not come up with an answer to the lingering estate and generation-skipping transfer (GST) tax question for individuals who die this year. And, with the lack of a step-up in basis, some heirs will face higher combined estate and income tax costs for deaths occurring this year rather than in 2009. What a topsy-turvy world we live in.
There is still a possibility that Congress will retroactively reinstate the estate and GST taxes to the beginning of the year, but as each day goes by, this gets more and more unlikely. Even if the House could get their act together, I would be surprised to see anything come out of the Senate Finance Committee.
Apart from tax uncertainty, the continuing inaction could also pose a problem for individuals with wills using formula clauses. These clauses work well when the estate tax is in force but they may produce unintended consequences when there is no estate tax. Action may need to be taken if it becomes clear that Congress will not be addressing the situation.
