IRS Extends Deadline on Filing for Estates of Those Who Died in 2010

6:19 pm Asset Protection, Estate Planning, Probate

IRS Logo 150x150 IRS Extends Deadline on Filing for Estates of Those Who Died in 2010The IRS announced an extension of the Nov. 15, 2011 filing deadline it unveiled in August on large estates ($5 million+) of those who died in 2010.  The new deadline is now Jan. 17, 2012.

The estate and generation-skipping transfer taxes that were repealed for 2010 were reinstated retroactively to Jan. 1, 2010 when President Obama signed the 2010 Tax Relief Act into law last December.

However, the new law also gave the estates of those who died in 2010 a special tax break:  they could elect to opt out of the default estate tax regime and receive a full step up in basis on estate assets.

Last month, the IRS finally published guidance for the executors of estates of individuals who passed away in 2010, explaining how executors can opt out of estate taxes and the tax rules that apply.

Unfortunately, the form that needs to be filed with the IRS to opt out of the estate tax has not yet been issued.  Hence, the extension.

According to a New York Times article, for many estates the decision will be easy, but there are some executors who are finding it anything but simple.  Here’s why:  if heirs opt out of the estate tax, the estate assets will not be valued based on the date of death, but at the original value – making beneficiaries eligible for what could be considered a tax credit ($3 million for a spouse and $1.3 million for any other heir) against the assets’ appreciated value.  The problem lies with determining who benefits from the $1.3 million credit.

Thankfully, executors who find themselves in this situation now have another two months in which to make a decision – providing more time to consult with a probate attorney for guidance in navigating these unique circumstances.

Contact us today for individualized planning strategies to meet your unique needs.

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