Well its now 2010 and today there is no estate tax. There is no guarantee that Congress will not retroactively pass one that might pass Supreme Court muster. So, despite the possible tax savings for a person worth over $1.0 Million who dies in 2010, if these savings get cancelled out retroactively, you’ll still be dead. So spend your wealth, and enjoy the New Year. We’ll return to the perils of Granny tomorrow.

Suppose Decedent dies on January 1, 2010 and has what’s known as a formula clause which leaves the “maximum amount that can pass tax free” to a family style trust for the benefit of the husband and children. Now, consider Congress retroactively changes the law changing that amount to $3.5 Million. Now as of January 1, 2010, what is the trustee of the trust entitled to receive, all of decedent’s estate or $3.5 Million. Does he need to disclaim? Is he taxed on the entire amount if he funds that trust immediately? Lots of questions and unfortunately no good answers.